Calculating instalments of Part XII.1 tax

Part XII.1 applies to the income from carved-out property acquired after July 19, 1985 [section 209]. Carved-out property includes Canadian resource property when certain conditions are met. The tax rate is 45% of this income.

Arrears and refund interest apply to Part XII.1.

You have to make instalment payments equal to one-twelfth of the estimated tax payable under Part XII.1 each month in the tax year. The remaining tax, if any, is due on or before your balance-due day.

Unlike some other taxes, you do have to make instalment payments even if your Part XII.1 tax is $3,000 or less in the current or previous year.

Reporting Part XII.1 tax

Report the Part XII.1 tax you owe on Form T2096, Part XII.1 Tax Return – Tax on Carved-out Income. We should receive the return within six months of the end of your tax year.

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