Instalment worksheet instructions and examples

Amount A – Estimated taxable income for 2024

Enter the amount of taxable income you're estimating for your 2024 tax year.

Amount 1 – Base amount of federal tax on income

Multiply your estimated income (amount A) by the current federal basic tax rate on corporations (38%).

Amount 2 – Additional tax on banks and life insurers

An additional tax of 1.5% is levied on taxable income of banking and life insurance groups above $100 million.

Refer to: Line 565 in the T4012, T2 Corporation – Income Tax Guide (T2 guide)

Amount 3 – Recapture of investment tax credit

A corporation that disposed of a property used in scientific research and experimental development (SR&ED), or converted it to commercial use, should report a recapture in its income tax return for the year in which the disposition or conversion occurred.

Refer to: Line 602 (T2 guide)

Amount 4 – Refundable tax on Canadian controlled private corporation's (CCPC's) investment income

An additional refundable tax of ten and two-thirds (10 2/3)% is levied on the investment income (other than deductible dividends) of a CCPC.

Refer to: Line 604 (T2 guide)

Amounts N1 to N11 correspond to federal non-refundable credits that you estimate will apply to your 2024 tax year.

Amount N1 – Small business deduction

Corporations that were CCPCs throughout the tax year may be able to claim the small business deduction (SBD). The SBD is 19% of whichever of the following amounts is less: the income from active business carried on in Canada, the taxable income, the business limit, or the reduced business limit.

Refer to: Small business deduction (T2 guide)

Amount N2 – Federal tax abatement

The federal tax abatement is equal to 10% of taxable income earned in the year in a Canadian province or territory. Income earned outside Canada is not eligible for the Federal tax abatement.

Amount N3 – Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction

Corporations that derive at least 10% of their gross revenue for the year from manufacturing or processing goods in Canada for sale or lease can claim the manufacturing and processing profits deduction (MPPD) that reduces Part I income tax payable. The MPPD applies to the part of taxable income that represents Canadian manufacturing and processing profits. Calculate the MPPD at the rate of 13% on income that is not eligible for the small business deduction. A temporary corporate tax rate reduction applies to manufacturers of qualified zero-emission technology.

Refer to: Line 616 (T2 guide)

Amount N4 – Investment corporation deduction

A Canadian public corporation that is an investment corporation, as defined in subsection 130(3), can claim a deduction from Part I tax that the corporation would otherwise have to pay. This deduction is equal to 20% of the taxable income for the year that is more than the taxed capital gains for the year.

Refer to: Lines 620 and 624 (T2 guide)

Amount N5 – Federal foreign non–business income tax credit

A federal foreign non–business income tax credit is available to Canadian residents to prevent double taxation of any non–business income earned in a foreign country that was taxed by that foreign country. The credit is also available to authorized foreign banks on their Canadian banking business from sources in a foreign country.

Refer to: Line 632 (T2 guide)

Amount N6 – Federal foreign business income tax credit

To prevent double taxation, a corporation that pays foreign tax on income or profits it earned from operating a business in a foreign country can claim a federal foreign business income tax credit.

Refer to: Line 636 (T2 guide)

Amount N7 or N8 – General tax reduction

A general tax reduction of 13% is available on qualifying income. Corporations benefit from the general tax reduction only on taxable income that is subject to a rate of 38%. This reduction generally does not apply to income eligible for the following deductions:

• Small business deduction (amount N1)
• Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction (amount N3)
• Investment corporation deduction (amount N4)

CCPCs enter the calculated amount at N7. Other corporations enter the amount at N8.

Refer to: General tax reduction (T2 guide)

Amount N9 – Federal logging tax credit

Corporations that have income from logging operations and have paid logging tax to the province of Quebec or British Columbia can claim this credit.

Refer to: Line 640 (T2 guide)

Amount N10 – Federal qualifying environmental trust tax credit

A corporation that is the beneficiary under a qualifying environmental trust can claim a tax credit equal to Part XII.4 tax payable by the trust on that income.

Refer to: Line 648 (T2 guide)

Amount N11 – Investment tax credit

A corporation earns an investment tax credit by applying a specified percentage to the cost of acquiring certain property (investments) or on certain expenditures.

Refer to:

• Schedule 31, Investment Tax Credit – Corporations
• Line 652 (T2 guide)

Amount D – Estimated 2024 tax payable on income

Amount calculated on the worksheet.

Amount E – Estimated 2024 tax payable on capital of financial institutions (Part VI tax)

Part VI levies a tax on a financial institution's taxable capital employed in Canada. Part VI tax is 1.25% of the taxable capital employed in Canada that is more than the $1 billion capital deduction for the year.

Refer to: Line 720 (T2 guide)

Amount F – Estimated 2024 tax payable on corporations paying dividends on taxable preferred shares (Part VI.1 tax)

Generally, the first $500,000 of dividends paid in the year on taxable preferred shares is exempt from Part VI.1 tax liability. This basic annual exemption is called the dividend allowance.

However, the $500,000 dividend allowance is reduced if you paid more than $1 million of dividends on taxable preferred shares in the previous year.

Refer to: Line 724 (T2 guide)

Amount G – Estimated 2024 additional tax payable on authorized foreign banks (Part XIII.1 tax)

Every authorized foreign bank is subject to Part XIII.1 tax equal to 25% of its taxable interest expense for the year.

Refer to: Line 727 (T2 guide)

Corporation A resides and operates only in Nova Scotia. Its estimated income for 2024 is $600,000 and is eligible for the small business deduction.

Corporation A would estimate its provincial tax as follows:
The lower rate of 2.5% applies to the first $500,000 (Nova Scotia business limit). The amount over the $500,000 business limit is taxed at the higher rate of 14%. The total estimated net provincial tax is calculated as follows:

Amount R1 – Investment tax credit refund

Any investment tax credit you earned in the tax year must first be used to reduce taxes payable to zero, before the remainder can be claimed as a refund.

Refer to: Line 780 (T2 guide)

Amount R2 – Dividend refund

A private or subject corporation may be entitled to a dividend refund for dividends it paid for the tax year.

Refer to: Dividend refund (T2 guide)

Amount R3 – Federal capital gains refund

Investment corporations and mutual fund corporations may be eligible for a federal capital gains refund.

Refer to:

• Line 788 (T2 guide)
• Schedule 18, Federal and Provincial or Territorial Capital Gains Refund

Amount R4 – Federal qualifying environmental trust tax credit

The amount of federal qualifying environmental trust tax credit refund that would not be used in the Part I tax calculation.

Refer to: Line 792 (T2 guide)

Amount R5 – Canadian film or video production tax credit

A fully refundable tax credit is available to qualified corporations that produce an eligible production certified by the minister of Canadian Heritage to be a Canadian film or video production.

Refer to: Line 796 (T2 guide)

Amount R6 – Film or video production services tax credit

A fully refundable tax credit is available to eligible production corporations for a film or video production certified by the minister of Canadian Heritage to be an accredited production.

Refer to: Line 797 (T2 guide)

Amount R7 – Canadian journalism labour tax credit

A refundable tax credit is available to qualifying journalism organizations for qualifying labour expenditures payable to an eligible newsroom employee.

Refer to: Line 798 (T2 guide)

Amount R8 – Tax withheld at source

This is the amount shown as "income tax deducted" on any information slips, such as NR4, T4A, or T4A-NR, you may receive.

Refer to: Lines 800 and 801 (T2 guide)

Amount R9 – Provincial and territorial capital gains refund

Investment corporations and mutual fund corporations may be eligible for a provincial or territorial capital gains refund.

Refer to:

• Line 808 (T2 guide)
• Schedule 18

Amounts R10 to R55 are the refundable tax credits available to all provinces and territories (other than Quebec and Alberta).

Refer to: Chapter 8 of the T2 guide under Provincial and territorial tax.

Corporation D has estimated its tax for 2024 at $900,000. The actual taxes for 2023 and 2022 are $912,000 and $60,000 respectively.

Corporation D will use Worksheet 2 to determine the most advantageous option.

Corporation E has estimated its tax for 2024 at $912,000. The actual taxes for 2023 and 2022 are $912,000 and $60,000, respectively. Using Corporation E will use Worksheet 2 to determine the most advantageous option.

Corporation F has estimated its tax for 2024 at $240,000. The actual taxes for 2023 and 2022 are $240,000 and $36,000, respectively. Corporation F will use Worksheet 3 to determine the most advantageous option.