Temporary exemption calculation

Program(s) affected: T2 Document created: October 6, 2003 Tax year(s): 2003 Document last modified: December 16, 2003 Version(s): Problem status: Fixed

How do I calculate the amount that entitles a corporation to the temporary exemption if its fiscal period includes June 12, 2003?

If the temporary exemption includes June 12, 2003, perform the following calculations:

• (Amount from line 50 of form CO-771) X (Number of days in the fiscal period that fall within the 5-year period ÷ Number of days in the fiscal period) = (A)

• (A) X (Number of days in the fiscal period that come after June 12, 2003, and fall within the 5-year period ÷ Number of days in the fiscal period that fall within the 5-year period) X 25% = (B)

• Amount giving entitlement to the temporary exemption = (A) - (B)

Example:

A corporation's fiscal year-end is September 30, 2003. Its exemption period is from October 1, 2001, through September 30, 2006.

• $200,000 X (365 / 365) = $200,000 (A)

• $200,000 X (110 / 365) X 25% = $15,068 (B)

• $200,000 (A) - $15,068 (B) = $184,932 (amount giving entitlement to the temporary exemption)

In DT Max, select the option CO-771 under the keyword Override, enter 553 under FIELD-DATA, and enter the amount giving entitlement to the temporary exemption.

In this type of case, it is recommended to join an explanatory note to the file.

The revised form CO-771 will be implemented in a future version of the program.

This calculation is now performed properly in version 7.01.