Calculation of alternative minimum tax for tax years 2003 and subsequent

Pursuant to information bulletin 2004-6 published by the ministère des Finances du Québec on June 30, 2004, respecting the calculation of alternative minimum tax, the single tax rate is reduced from 20% to 16%, the amount of the basic exemption is increased from $25,000 to $40,000 and the portion of capital gain realized in the year that must be included in the calculation of the adjusted taxable income is increased from 70% to 75%. These modifications apply retroactively as of tax year 2003.

The ministère des Finances will locate and modify all the cases affected by these new measures. Clients will not be required to contact the ministère to request adjustments.

Please note however that it may be necessary in certain cases to submit a Request for an Adjustment (form TP-1.R-V ) to the ministère. Such situations include:

• The tax system election made in 2003, which could be affected;
• Taxpayers with a balance of minimum tax carried from years prior to 2003, who might use a higher amount in 2003.

DT Max version 7.35 reflects the changes to the AMT calculations for 2003. This version also includes a special filter enabling you to automatically obtain a list of all the clients who may be affected by these new measures. These include all the clients who had a minimum tax balance at the beginning of 2003 as well as all the clients with minimum tax to pay in 2003. Please note that in order for this filter to work, affected clients must be on the print queue. [For tax year 2004, these changes will be incorporated to the first CD-Rom version of the upcoming tax season (v8.10).]

To use the special Quebec AMT filter, select tax year 2003, then select the option 2003 Quebec AMT in the filter drop-down menu on the client list window. Note that afterwards, you will experience slowness if you access your client files from the filter results page. Therefore, we recommend that you print the filter results, then access your client files from your non-filtered database.

Please note that a new warning has been added to DT Max for tax year 2004 to remind you to change carryforward amounts for all clients with minimum tax carryforwards.