What's new for T1/T3 version 15.30?

Please note that all program versions are first made available on the Internet.

In this version...

System change

New feature

DT Max T1

Version highlights

Implementation of announced tax changes
2012 Planner Standard Caveat

Notes

Deceased or bankrupt taxpayers
Printing prescribed forms for 2012 returns

Quebec
Federal

Enhancements

Foreign capital gains
T1198 – Statement of Qualifying Retroactive Lump-Sum Payment
T1005 – Manitoba Tuition Fee Income Tax Rebate
Ontario Energy and Property Tax Credit

New diagnostics

Notes and diagnostics

Quebec EFILE

Error prevention report

Prince Edward Island
Nova Scotia

New forms
New keywords
New options

DT Max T3

Version highlights

Changes affecting death benefits

In the keyword DEATH-BENEFIT
New keyword OTH-DEATH-BENEFIT

New types of trusts added
2012 tax rates for T3
New additions as per clients' suggestions

Modified forms
Warning: verifying carryforwards
New keywords and options

System change

New feature

It is now possible to display a list of all the Review tags in a return. To do so:

Right-click on any field in the tax return and select the option List all the review tags,
OR
From the View menu, select Field review tags and click the option List all the review tags.

DT Max T1

Version highlights

Implementation of announced tax changes

Since our last release, the following budgets were announced:

Alberta – February 9, 2012
British Columbia – February 15, 2012
Federal – June 6, 2012
Manitoba – April 12, 2012
New Brunswick – March 22, 2012
Newfoundland and Labrador – April 19, 2012
Northwest Territories – February 3, 2012
Nova Scotia – April 3, 2012 Nunavut – February 22, 2012
Ontario – March 27, 2012Prince Edward Island – April 17, 2012
Quebec – March 20, 2012
Saskatchewan – March 21, 2012
Yukon – March 15, 2012


At the time of writing, the majority of the above-mentioned budget speeches were tabled in their respective legislatures.

The 2012 DT Max tax planner takes into consideration the basic tax changes announced in each budget, allowing you for more effective planning opportunities, as well as the ability to perform cost projection calculations.

Please refer to these topics from our Knowledge Base for a detailed review of the tax changes implemented:

• Non refundable tax credits (2012)
• Tax brackets and rates (2012)
• Tax changes in DT Max (2012)

2012 Planner Standard Caveat

We would like to remind our users that the planner is equipped with the most recent information available at the time of our production process.

This information includes the 2012 non-refundable tax credits and tax rates indexed to reflect the 2012 amounts.

In some cases, instead of an indexation factor, we have implemented the amounts prescribed by the taxing jurisdiction depending on the availability of the information.

However, please note that due to various factors beyond our control, certain new tax measures are not included in our planner version. Should you require a precise projection (rather than an estimate) of your client's 2012 tax liability, we strongly suggest that you review our planner's results with care.

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Notes

Deceased or bankrupt taxpayers

Although the tax planner might not be appropriate to prepare 2012 income tax returns for living taxpayers, it may be used legally to prepare returns on behalf of deceased or bankrupt taxpayers. Pursuant to DT Max's calculations, tax plans will appear as preliminary updates of tax forms for the new tax year. However, the returns of deceased or bankrupt taxpayers will be displayed on approved forms from the prior tax year, in conformity with the government's instructions.

For more details, please consult the following “in-house” documents from the Knowledge Base: "Preparing the return of a deceased taxpayer" and "Preparing a bankruptcy return".

Printing prescribed forms for 2012 returns

Year after year, there is a certain level of confusion among tax preparers in regard to the forms' versions. Administrative policies differ from one level of government to the other as for the validity of the prescribed forms. DT Max was programmed in accordance to these administrative policies.

Quebec

When a 2012 tax return is produced before the official annual forms are made available, depending on whether the Quebec form is prescribed or not, the year that is printed may be 2011 or 2012. Even though the system's calculation engine is calibrated for tax year 2012, only a complete paper certification process (performed in the fall) allows the preparers to use the 2012 prescribed forms.

In addition, the authorization number (RQ11-TP55) displayed on all prescribed forms, is not and should not be printed on these types of returns.

Federal

On all federal forms, the year is changed to 2012.

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Enhancements

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Foreign capital gains

In response to feedback from our valued clients, we have greatly enhanced the treatment of foreign capital gains in DT Max. Indeed, the entries made under the keyword group Foreign-Inc will not only allow DT Max to calculate any associated foreign tax credit, but also serve as the basis to report the capital gain to the income tax return.

In other words, for tax year 2012 and onward, when processing transactions that involve capital gains or losses from foreign sources, entries under the keyword group CAPITAL-GAIN are no longer required, as the entries made under the keyword group Foreign-Inc now serve as the basis for calculating BOTH any foreign tax credit AND the related capital gain to be reported on the income tax return.

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T1198 – Statement of Qualifying Retroactive Lump-Sum Payment

The data entry associated with the production of Form T1198, "Statement of Qualifying Retroactive Lump-Sum Payment", has been significantly enhanced. More precisely, the total amounts represented on the following lines:

– Total amount (principal and interest) (i.e. line 6850)
– Total principal (current and prior years)
– Total principal (prior years only)


are no longer entered in DT Max's data entry screen, considering that each one of these total amounts can be established simply based on the figures entered under the keywords Cap-Breakdown and Total-Interest . In other words, once the breakdown of the principal and the total interest are entered in the data entry using the aforementioned two keywords, each one of these totals will be automatically determined by DT Max and will be reported to the corresponding line on the form. Therefore, consequent upon this improvement, the superfluous options in data entry that were used to enter these totals have been removed.

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T1005 – Manitoba Tuition Fee Income Tax Rebate

In 2011, the presentation of the calculation on Form T1005, "Manitoba Tuition Fee Income Tax Rebate", was modified. With the intention of making the data entry associated to the aforementioned form follow more closely the presentation applicable since 2011 (for the calculation of the tuition fee income tax rebate) a new keyword has been implemented.

As of 2011, Form T1005 determines the “total tuition rebate available” by subtracting the tuition fee income tax rebate claimed in prior years from the eligible tuition fees as previously claimed (after the 60% rate has been applied), rather than by simply carrying forward an amount that is already net of such subtractions.

Consequently, the keyword TUITREB-CLAIMED has been created in order to enter the tuition fee income tax rebate amount claimed in prior years. Furthermore, as a result of this modification, the keyword TUIT-TAX-CF has been removed, since it no longer applies to the calculation of the tuition fee income tax rebate under the presentation of the calculation that has been in effect since 2011.

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Ontario Energy and Property Tax Credit

Please note that we added two new options, namely Public long-term care home and Indian residing on reserve, to the keyword Residence in order to streamline and facilitate the data entry when claiming the Ontario Energy and Property Tax Credit (OEPTC).

The rationale for creating these two options was the following: when claiming the OEPTC for an individual who is either living in a public long-term care home or on a reserve, both options will automatically generate the specific keywords necessary to appropriately claim the OEPTC for the type of individual involved. For example, in the case of an individual living in a public long-term care home, DT Max will automatically generate the specific keywords (in particular, the keyword EnergyComponent to enter the amount paid for accommodation in a public long-term care home) that are required to appropriately claim the OEPTC for this individual on Form ON-BEN, "Application for the 2012 Ontario Trillium Benefit and the Ontario Senior Homeowners' Property Tax Grant".

This same principle applies when claiming the OEPTC for a member of a First Nation residing on a reserve. When selecting the option Indian residing on reserve, DT Max will then automatically generate the specific keywords (in particular, the keyword EnergyComponent to enter home and energy costs on reserve), that are required to appropriately claim the OEPTC for this person on Form ON-BEN.

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New diagnostics

Notes and diagnostics

Quebec EFILE:

Ineligible for Quebec efile

Due to the reason(s) below, this return is ineligible for Quebec efile. For additional information, please refer to the Revenu Québec document entitled "SW-223.CE-V NetFile Québec: Errors Codes".

• A valid child care provider identification number or SIN is required when claiming child care expenses.

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Error prevention report

Prince Edward Island:

- Line 479 Prince Edward Island Volunteer Firefighters' Tax Credit

An amount has been entered in box 87 of the T4 group regarding the exemption granted to volunteer firefighters. DT Max considers the taxpayer to be an eligible volunteer firefighter and has claimed the volunteer firefighters' tax credit on Form PE428. You must use the keyword FIREFIGHTERS to indicate that the taxpayer is eligible for the Prince Edward Island Volunteer Firefighters' Tax Credit. The taxpayer has to meet all of the following conditions:

• was a resident of Prince Edward Island on December 31, 2012;
• claimed the volunteer firefighters' amount on line 362 of the federal Schedule 1.

Nova Scotia:

- Line 479 Nova Scotia Volunteer Firefighters and Ground Search and Rescue Tax Credit

An amount has been entered in box 87 of the T4 group regarding the exemption granted to volunteer firefighters. You must use the keyword Firefighters-Cr to indicate that the taxpayer is eligible for the Nova Scotia Volunteer Firefighters and Ground Search and Rescue Tax Credit. The taxpayer has to meet all of the following conditions:

• was a resident of Nova Scotia on December 31, 2012;
• was a volunteer firefighter or a ground search and rescue volunteer for a minimum of six months during the period of January 1 to December 31, 2012;
• did not receive salary, wages, or compensation, other than reasonable reimbursement or allowance for expenses; and
• for a volunteer firefighter, the taxpayer was listed as a volunteer firefighter on the report filed by the fire chief of the volunteer fire department.

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New forms

Federal:

– T1164 – Statement B - AgriStability and AgriInvest Programs Information and Statement of Farming Activities for Additional Farming Operations
As of tax year 2012, DT Max will produce Form T1164, "Statement B - AgriStability and AgriInvest Programs Information and Statement of Farming Activities for Additional Farming Operations". This form is used particularly, when more than one farming operation are involved, as a statement that accurately shows the farming activities during the year for tax purposes as well as for purposes of the AgriStability and AgriInvest programs.

– T1274 – Statement B - Harmonized AgriStability and AgriInvest Programs Information and Statement of Farming Activities for Additional Farming Operations

As of tax year 2012, DT Max will produce Form T1274, "Statement B – Harmonized AgriStability and AgriInvest Programs Information and Statement of Farming Activities for Additional Farming Operations". This form is used particularly, when more than one farming operation are involved, as a statement that accurately shows the farming activities during the year for tax purposes as well as for purposes of the AgriStability and AgriInvest programs.

In-house forms:

– Public transit amount (line 364)
The new DT Max in-house worksheet “Public transit amount” provides you with the details regarding the amount claimed on line 364 of Schedule 1. In other words, the aforementioned in-house worksheet supports the calculation for line 364 of Schedule 1.

– Children's fitness amount (line 365)

The new DT Max in-house worksheet “Children's fitness amount” provides you with the details regarding the amount claimed on line 365 of Schedule 1. In other words, the aforementioned in-house worksheet supports the calculation for line 365 of Schedule 1.

– Children's arts amount (line 370)

The new DT Max in-house worksheet “Children's arts amount” provides you with the details regarding the amount claimed on line 370 of Schedule 1. In other words, the aforementioned in-house worksheet supports the calculation for line 370 of Schedule 1.

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New keywords

1. In the Foreign-Inc keyword group, pertaining to federal Schedule 3, "Capital Gains (or Losses) in 2012", for the capital gains selection:

   CapGainType.fi : Type of capital gain

   Use the keyword CapGainType.fi to enter the specific type of capital gain. Clicking on this keyword will open the capital gains group. Enter all the information you have to generate correct calculations and to produce the appropriate schedules and forms relating to capital gains, losses and deductions.

   The following sub-keywords have been created for this group:

   • #Shares.fi : Number of shares – Stocks & other non-depreciable property

     Use #Shares.fi to enter the number of shares of stock sold.

   • Type.fi : Type of capital property

     Use Type.fi to choose the type of capital property.

   • Date-Acquis.fi : Date of acquisition

     Use Date-Acquis.fi to enter the date of acquisition of the capital property sold.

   • Province-Terr.fi : Province or territory of the property

     Use Province-Terr.fi to enter the province or territory of the property.

   • Date-Maturity.fi : Date of maturity - Bonds, debentures, promissory notes, and other similar properties

     Use Date-Maturity.fi to enter the maturity date of bonds.

   • Face-Value.fi : Face value - Bonds, debentures, promissory notes, and other similar properties

     Use Face-Value.fi to enter the face value of the bonds.

   • Date-Disp.fi : Date of disposition

     Use Date-Disp.fi to enter the date of disposition of the capital property sold.

   • Proceeds.fi : Proceeds of disposition

     Use Proceeds.fi to enter the proceeds of disposition.

   • ACB.fi : Adjusted cost base of the property

     Use ACB.fi to enter the ACB (adjusted cost base) of a capital property disposition.

   • Expenses.fi : Outlays and expenses relating to capital property dispositions

     Use Expenses.fi to enter the expenses related to a capital property disposition.

   • ACB-Exchange.fi : Exchange rate applicable to the adjusted cost base

     Use ACB-Exchange.fi to indicate the exchange rate applicable to the adjusted cost base. Enter this rate only if the adjusted cost base is expressed in foreign currency.

   • Exp-Exchange.fi : Exchange rate applicable to the outlays and expenses relating to capital property dispositions

     Use Exp-Exchange.fi to indicate the exchange rate applicable to the outlays and expenses relating to capital property dispositions. Enter this rate only if the outlays and expenses relating to capital property dispositions are expressed in foreign currency.

   • CalcCapGain.fi : Calculate the capital gain and carry the result on schedule 3

     Use CalcCapGain.fi to manage whether or not to carry the capital gain on the tax return. By default, DT Max will carry the capital gain on the tax return.

   • Amount.fi : Amount of total capital gain

     Use Amount.fi to enter the total amount of capital gains from the T-slip. This is the total capital gain, which reflects 100% of the gain. DT Max will calculate the taxable amount.

   • Reserves.fi : Reserve on capital gain [Sch. 3 L. 192]

     Use Reserves.fi to enter the amount of the capital gains reserve for the current year in respect to that particular capital disposition. DT Max will carry forward the amount to be brought into income in future years. It is the tax preparer who must decide when and how much of the reserves to bring into income (see Cap-Reserves).

2. In the Home-Buyers-Amt keyword group, pertaining to the Saskatchewan home buyers' amount:

   HomeMaxAmount-SK : Enter the portion of the home buyers' amount for the purchase of a qualifying home (not exceeding $10,000)

   Use HomeMaxAmount-SK if the home was jointly purchased by more than one owner (OTHER THAN THE SPOUSE) to enter your portion of the home buyers' amount for the purchase of a qualifying home (not exceeding $10,000).

3. In the TUITION-TAX keyword group, pertaining to Manitoba form T1005, “Manitoba Tuition Fee Income Tax Rebate”:

   TUITREB-CLAIMED : Year and amount of tuition fee income tax rebate claimed from line 15 of the Form T1005 [T1005 L.9]

   Use TUITREB-CLAIMED to enter the year and amount of the tuition fee income tax rebate claimed.

4. In the ProvCredit keyword group, pertaining to the Prince Edward Island equity tax credit:

   EquityCr-CF.pe : Equity tax credit carryforward

   Use this keyword to enter the Prince Edward Island equity tax credit carryforward from prior years.

5. In the Business keyword group, pertaining to the federal form T1163/T1273 (Statement A):

   Statement-A : Select this business to use the T1163/T1273 (Statement A) form

   If the taxpayer has more than one farming operation, complete Form T1163/T1273 (Statement A) for one operation and a separate Form T1163/T1274 (Statement B) for each additional operation.

   Use Statement-A to select the business for which "Statement A" will be used.

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New Options

1. The following options have been added to the drop-down menu of the keyword Residence :

   Public long-term care home

   To claim the Ontario energy and property tax credit (OEPTC) on Form ON-BEN, "Application for the 2012 Ontario Trillium Benefit and the Ontario Senior Homeowners' Property Tax Grant", for an individual who is living in a public long-term care home.

   Indian residing on reserve

   To claim the OEPTC on Form ON-BEN, for an individual who is a member of a First Nation residing on a reserve.

2. The following item has been added to the options of the keyword Optimize , under the "Provincial" section:

   SK – Home buyers' amount

   This option allows you to manage the claim for the Saskatchewan First-Time Homebuyers' Tax Credit between the spouses or common-law partners.

DT Max T3

Version highlights

Changes affecting death benefits

1. In the keyword DEATH-BENEFIT

   The Alt + J feature has been added to the keyword Death-Benefit , so that a different amount may be entered for Quebec purposes.

   On the federal level, if the CPP or QPP death benefit is received, the beneficiary of the deceased person's estate can choose to report it on line 114 of their own return or on a “T3 Trust Income Tax and Information Return” for the estate.

   For Quebec, the amount of the benefit must be reported in the “Trust Income Tax Return” (form TP-646-V), regardless of whom the cheque was made payable to. However, if the death benefit is the only income to be reported in the trust return, the beneficiary or beneficiaries of the estate must include it in their income.

2. New keyword OTH-DEATH-BENEFIT

   Death benefits other than CPP or QPP benefits should now be entered with the new keyword Oth-Death-Benefit (see "New keywords" section).

   A death benefit is an amount received after a person's death for that person's employment service. It is shown in box 106 of the T4A slip or box 26 of the T3 slip.

   Taxes may not have to be paid on up to $10,000 of the benefit received. The amount to be included in the tax return is the lesser of the gross amount received and the portion of the total gross benefit which exceeds $10,000.00.

New types of trusts added

Four new types of trusts have been added to the T3 program:

• Registered education savings plan (RESP) trust
• Registered disability savings plan (RDSP) trust
• Registered retirement income fund (RRIF) trust
• Registered retirement savings plan (RRSP) trust

From the T3 guide:

An RRSP, RRIF, or RESP trust has to complete and file a T3 return if the trust meets one of the following conditions:

• the trust has borrowed money and paragraph 146(4)(a) or 146.3(3)(a) of the Act applies;

• the RRIF trust received a gift of property and paragraph 146.3(3)(b) of the Act applies; or

• the last annuitant has died and paragraph 146(4)(c) or subsection 146.3(3.1) of the Act applies. If this is the case, claim an amount on line 43 of the T3 return only if the allocated amounts were paid in accordance with paragraph 104(6)(a.2) of the Act.

If the trust does not meet one of the above conditions and the trust held non-qualified investments during the tax year, you have to complete a T3 return to calculate the taxable income from non-qualified investments, determined under subsection 146(10.1) or 146.3(9). If the trust is reporting capital gains or losses, it has to report the full amount (that is, 100%) on line 01 of the T3 return.

If the trust does not meet one of the above conditions and the trust carried on a business, you have to complete a T3 return to calculate the taxable income of the trust from carrying on a business. Do not include the business income earned from the disposition of qualified investments for the trust.

An RDSP trust has to complete and file a T3 return if the trust has borrowed money and subparagraph 146.4(5)(a)(i) or 146.4(5)(a)(ii) of the Act applies. If this does not apply and the trust carried on a business or held non-qualified investments (as defined in subsection 205(1)) during the tax year, you have to complete a T3 return to calculate the taxable income from the business or non-qualified investments. If the trust is reporting capital gains or losses, it has to report the full amount (that is, 100%) on line 01 of the T3 return.

DT Max changes:

Changes have been implemented on the federal Schedule 1 and Quebec Schedule A for non-qualified investments for these trusts. These trusts are taxable on the capital gains resulting from the disposition of non-qualified investments. These capital gains are subject to a 100% inclusion rate.

2012 tax rates for T3

Ontario enacts higher income tax rates

On June 20th, 2012, the Ontario government introduced and passed Bill 114, which implements a new tax rate for incomes over $500,000. This new tax rate is 12.16% for taxation years ending in 2012 and 13.16% for taxation years ending after 2012. This change in tax rate affects both testamentary and inter-vivos trusts. This new tax rate will also apply to the Ontario capital gains refund for mutual fund trusts under section 105.

The following forms have been modified due to this new implementation:

- T3ON - Ontario Tax
- T184 - Capital Gains Refund for a Mutual Fund Trust
- T3MJ - T3 Provincial and Territorial Taxes - Multiple Jurisdictions


All federal and provincial tax rates have been updated in DT Max T3 for 2012. The rates are based on information available as of June 1, 2012. Please refer to the DT Max Knowledge base for additional details on the new tax rates.

New additions as per clients' suggestions

• The ability to generate Schedule 6 and allocate $ 0.00 to qualifying trusts
• The ability to add the trust name to the invoice
• In the “Assembly Instructions” in-house form, we have added a check box to attach a copy of the will or trust document.

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Modified forms

Federal:

- Schedule 11 - Federal Income Tax

- Schedule 12 - Minimum Tax

All provincial tax calculation schedules:

- T3AB – Alberta Tax

- T3BC – British Columbia Tax

- T3MB – Manitoba Tax

- T3NB – New Brunswick Tax

- T3NL – Newfoundland Tax

- T3NS – Nova Scotia Tax

- T3NT – Northwest Territories Tax

- T3NU – Nunavut Tax

- T3ON – Ontario Tax

- T3PE – Prince Edward Island Tax

- T3SK – Saskatchewan Income Tax

- T3SK(CG) – Saskatchewan Farm and Small Business Capital Gains Tax Credit

- T3YT – Yukon Tax

Quebec:

- Schedule A – Taxable Capital Gains and Designated Net Taxable Capital Gains

- MR.14.B – Notice Before Distribution of Property

- TP-1012.B – Carry-Back of a Deduction or Tax Credit

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Warning: verifying carryforwards

As always, we recommend that you verify your carryforwards carefully before processing your client files.

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New keywords and options

1. Bill-GST-HST-OV : Select the applicable tax to charge (if different from the billing setup)

   Use the keyword Bill-GST-HST-OV and select the applicable tax to be used for your situation.

   Charging Sales Tax

   Do you sell goods or provide services in Canada? If so, you are required to collect sales tax from your customers on many of the items they purchase.

   Depending on the province or territory in which you operate your business, you need to collect either:

   • a combination of GST and PST
   • GST only, or
   • HST

   Charging sales tax to out-of-province customers

   If you are a vendor in one province or territory and you make sales to residents of another province or territory, what sales taxes do you charge them? When you sell and ship or deliver taxable goods and services to out-of-province/territory customers, the sales tax that applies in your customer's province or territory is generally applicable.

   The following options apply to this keyword:

   GST and PST
   GST only
   HST
   

2. In the new Bill-GST-HST-OV keyword group:

   1. HST-Rate.b : HST rate to be used

   2. GST/HST-Number.b : GST/HST registration number (if different from the billing setup)

   3. GST-Rate.b : GST rate to be used

   4. PST-Rate.b : PST rate to be used

   5. App-GSTbeforePST : Whether GST should be included in the calculation of the PST

      The following options apply to this keyword:

      Yes
      No

   6. GST-Number.b : GST registration number (if different from the billing setup)

   7. PST-Number.b : PST registration number (if different from the billing setup)
3. In the Business keyword group:

   Statement-A : Select this business to use the T1163/T1273 (Statement A) form

   If the taxpayer has more than one farming operation, Form T1163/T1273 (Statement A) should be completed for only one operation and a separate Form T1163/T1274 (Statement B) for each additional operation.

   Use the keyword Statement-A to indicate whether the information for this farm operation should be entered on form T1163/T1273 (Statement A).

4. In the IncomeSource keyword group:

   Oth-Death-Benefit : Death benefits other than CPP and QPP

   A death benefit is an amount for a deceased person's employment service. This amount is shown in box 106 of a T4A slip. If a death benefit is to be taxed in the trust according to the provisions of the trust document, you may be able to exclude up to $10,000 of the amount from the trust's income.

   If no one other than a trust received a death benefit, report the amount that is more than $10,000. Even if the trust did not receive all of the death benefits in one year, the total tax-free amount for all years cannot exceed $10,000.

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