Impact on filing
The Canada Revenue Agency (CRA) considers financial statements prepared under the International Financial Reporting Standards (IFRS) as an acceptable starting point for computing taxable income; however, financial statements prepared using IFRS may present information differently than financial statements prepared using other accounting principles or standards. We have made changes to some prescribed forms and the General Index of Financial Information (GIFI) to help taxpayers determine their net income (loss) for income tax purposes.
General Index of Financial Information (GIFI)
All corporations and partnerships except for insurance corporations use the GIFI to file their financial statements. The GIFI is an extensive list of financial statement items where each item has a unique code. A number of items have been added to the GIFI to record the components of other comprehensive income (OCI).
OCI is comprised of revenues, expenses, gains and losses that IFRS require or allow to be excluded from the net income. The components of OCI are:
- 7000 – Revaluation surplus
- 7002 – Defined benefit gains/losses
- 7004 – Foreign operation translation gains/losses
- 7006 – Equity instruments gains/losses
- 7008 – Cash flow hedge effective portion gains/losses
- 7010 – Income tax relating to components of other comprehensive income
- 7020 – Miscellaneous other comprehensive income
Item 9998, "Total – other comprehensive income," is the sum of amounts entered in items 7000 to 7020 for the current year and is included in item 9999, "Net income/loss after taxes and extraordinary items".
Item 3580, "Accumulated other comprehensive income," is included in equity in a taxpayer's balance sheet and includes all components of OCI for the current and previous tax years. When a taxpayer calculates amounts in accordance with IFRS, item 3580 is the total of all IFRS reserves presented separately in equity.
Schedule 1, Net Income (Loss) for Income Tax Purposes
Schedule 1 begins with the amount calculated for GIFI item 9999 and is used by corporations and partnerships to reconcile the net income (loss) reported on their financial statements and the net income (loss) required for tax purposes. Corporations use T2 Schedule 1, Net Income (Loss) for Income Tax Purposes, and partnerships use T5013 Schedule 1, Net Income (Loss) for Income Tax Purposes. Two lines exists in Schedule 1 for taxpayers to add or deduct items of OCI as necessary:
- 239 – Taxable/non-deductible other comprehensive income items
- 347 – Non-taxable/deductible other comprehensive income items
T2 Corporation Income Tax Return, T3 Trust Income Tax and Information Return and T5013 FIN, Partnership Financial Return
For the T2, T3 and T5013 returns, an IFRS identifier in the form of a question is asking the taxpayer if their corporation used the IFRS when it prepared its financial statements. For more information on IFRS, consult the T2 Corporation – Income Tax Guide, the T3 Trust Guide, and the Guide for the Partnership Information Return (T5013 Forms).
Forms and publications
- T2 Schedule 1, Net Income (Loss) for Income Tax Purposes
- T5013 Schedule 1, Net Income (Loss) for Income Tax Purposes.
- Guide T4012, T2 - Corporation – Income Tax Guide
- Guide T4013, T3 - Trust Guide
- Guide T4068, Guide for the Partnership Information Return (T5013 Forms)
- Guide RC4088, General Index of Financial Information (GIFI)
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