What's new for T2/T3 Internet version 19.17?

The latest DT Max program update is now available for downloading. It features the T2 program for fiscal periods ending from 2001 to 2016 and fully supports Corporation Internet Filing (T2, CO-17 and AT1). This version also features the T3/TP-646 program for the tax years ending from 2005 to 2015 inclusively. Installing this version will update your version of DT Max to 19.17.

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

In this version...

1. Version highlight: Yukon Political Contribution Tax Credit

1. Version highlights
   1. Schedule 200 and Schedule 3: Investment Income of Private Corporations
   2. Schedule 366 (New Brunswick Corporation Tax Calculation)
2. New forms
3. Revised forms
4. New keywords
5. Reminder: Amended CO-17 returns

1. Known issues fixed in version 19.17
2. Version highlights
   1. T1013
   2. 2016 income tax brackets
   3. New federal top income tax rate
   4. New Brunswick budget for 2016 and 2017
   5. Graduated tax rates
   6. Special tax rules
   7. New CCA classes
   8. Requirement to file RL-16 for a trust residing in Canada, outside Quebec
3. Revised forms
4. New keywords
5. New options

For DT Max T2 & T3

1. Version highlight: Yukon Political Contribution Tax Credit

   The political contribution tax credit is available to both individuals and corporations that contribute to a recognized territorial political party or candidate for election to the Yukon Legislative Assembly.

   Beginning January 1, 2016, the maximum annual credit is $650. The credit amount is calculated as the sum of:

   • 75% of the first $400 of contributions;

   • 50% of the next $350 of contributions; and

   • 33.33% of the next $525 of contributions.

   The maximum annual credit prior to January 1,2016 is $500 and the credit amount is calculated as the sum of:

   • 75% of the first $100 of contributions;

   • 50% of the next $450 of contributions; and

   • 33.33% of the next $600 of contributions

DT Max T2

1. Version highlights

   1. Schedule 200 and Schedule 3: Investment Income of Private Corporations

      On December 7, 2015, the federal government tabled a Notice of Ways and Means Motion (NWMM) to implement a number of tax measures.

      Given that corporate tax rates are generally lower than personal tax rates, special refundable taxes are imposed on investment income of private corporations in order to limit the ability of individuals to defer taxation by holding investments in a private corporation. It is proposed that these refundable taxes and the related refund rate be increased effective January 1, 2016 to reflect the proposed new 33-per-cent personal income tax rate. Specifically:

      • The refundable additional Part I tax on investment income of Canadian-controlled private corporations (CCPCs) will be increased by 4 percentage points (to 10.67 per cent from 6.67 per cent);

      • The refundable portion of Part I tax on investment income of CCPCs will be increased by 4 percentage points (to 30.67 per cent from 26.67 per cent);

      • The rate at which refunds are made out of a private corporation's pool of refundable taxes previously paid (known as "Refundable Dividend Tax on Hand") when it pays dividends will be increased by 5 percentage points (to 38.33 per cent from 33.33 per cent of dividends paid); and

      • Part IV tax is imposed on certain taxable dividends received by private corporations that are otherwise deductible in computing taxable income. Due to the changes to the top personal marginal tax rate and the changes to the computation of a corporation's RDTOH balance, the Part IV tax rate will increase to 38 1/3% (from 33 1/3%). Finance notes that these rates reflect a federal small business tax rate in 2019 of 9%. This amendment applies to tax years ending after 2015. For tax years beginning before 2016, assessable dividends are taxed at 33 1/3% if they are received before 2016 and at 38 1/3% if received after 2015.

        The percentage of unused non-capital losses and farm losses that may reduce Part IV tax is also increased to 38 1/3% (from 33 1/3%) for tax years that end after 2015. For tax years that begin before 2016, losses applied to reduce Part IV tax are used first to offset assessable dividends that are subject to the higher 38 1/3% rate.

      The above changes have been implemented in this version of DT Max T2.

   2. Schedule 366 (New Brunswick Corporation Tax Calculation)

      Effective April 1st, 2016, the general corporate tax rate will increase to 14% from 12%. This change has been implemented in this version of DT Max T2.

2. New forms

   Federal:

   • Schedule 3 supplement - Part 2 - Calculation of Part IV tax payable

3. Revised forms

   Federal:

   • Schedule 4 - Corporation Loss Continuity and Application (2013 and later tax years)

   • Schedule 366 - New Brunswick Corporation Tax Calculation (2015 and later tax years)

   • Schedule 422 - British Columbia Film and Television Tax Credit (2015 and later tax years)

     Please note that, in regard to the above schedule, there have been changes to Part 8 and 9 concerning animation productions that started animation after June 26, 2015. For animated productions that started key animation after June 26, 2015, no minimum number or percentage of principal photography days are required.

   Quebec:

   • CO-17S.4 - Annexe concernant les pertes (Schedule respecting losses)

   • CO-1029.8.36.SM - Tax Credit for the Production of Performances

   • TP-1029.9 - Tax Credit for Taxi Drivers or Taxi Owners

   Please note that English versions of the Quebec forms below are now available:

   • CO-1029.8.36.PM - Tax Credit for Corporations Specialized in the Production of Multimedia Titles

   • RD-1029.7.8 - Agreement Between Associated Corporations Regarding the Expenditure Limit

   • RD-1029.8.6 - Tax Credit for University Research or Research Carried Out by a Public Research Centre or a Research Consortium

   • RD-1029.8.9.03 - Tax Credit for Fees and Dues Paid to a Research Consortium

   • RD-1029.8.16.1 - Tax Credit for Private Partnership Pre-Competitive Research

4. New keywords

   1. In the sub-keyword Credit-Types , under the keyword group Cred-Film , pertaining to federal Schedule 422 (British Columbia Film and Television Tax Credit):

      Animation : Animation production starting after June 26, 2015

      Use the keyword Animation to indicate if this is an animation production that started key animation after June 26, 2015.

5. Reminder: Amended CO-17 returns

   To amend a corporation income tax return you filed with Revenu Québec, you must:

   • Complete a new copy of form CO-17, Déclaration de revenus des sociétés, using the correct information (make sure you check box 24 to show that it is an amended return);

   • Complete a separate copy of form CO-17.R, Demande de redressement d'une déclaration de revenus ou d'une déclaration de revenus et de renseignements for each taxation year for which you are requesting an adjustment;

   • Gather any documents justifying your request for an adjustment (related forms, adjusted financial statements, schedules, etc.);

   • Mail the return and other documents to Revenu Québec.

DT Max T3

1. Known issues fixed in version 19.17

   The following issues pertaining to the T3 Trust Income Tax and Information Return have been fixed in this version of DT Max:

   1. Date for tax year of return

      The beginning date of the trust income tax return was incorrectly entered when the person's date of death was exactly a year prior to the year-end date of the trust (ex: Date of death: February 2, 2014, Year-End date: February 2, 2015). This issue has been fixed in version 19.17.

   2. Reporting foreign income and property on T3 trust return

      In version 19.05, the "Yes" box was not being ticked when the option for keyword Foreign-Info was "T1135 - Foreign income verification statement (simplified)". This issue has been fixed in version 19.17.

   3. Amount paid or payable to beneficiaries when there is a restricted farm loss

      The farming loss was not being restricted on the Allocation of expenses form, which resulted in a lower amount of income being allocated to the beneficiaries. This in turn increased the trust's net income. This issue has been fixed in version 19.17.

2. Version highlights

   1. T1013

      According to government specifications, the form T1013, Authorizing or Cancelling a Representative, will not be accepted if the Trust Account Number field is blank or zero filled. DT Max T3 will no longer produce the form T1013 when the field for the keyword Acct-Number is either left blank or is zero filled. A new diagnostic has been added on the "Notes and diagnostics" page and will be generated when this situation arises.

   2. 2016 income tax brackets

      All federal and provincial tax brackets have been updated in DT Max T3 for 2016. The rates are based on information available as of March 1, 2016. Please refer to the DT Max Knowledge Base for additional details on the new federal and provincial tax brackets.

   3. New federal top income tax rate

      Please note that a new federal top income tax rate of 33% will apply as of tax year 2016 to taxable income exceeding $200,000.

      Although the forms are not available for 2016, the calculation on the following forms will reflect this tax change:

      • Schedule 11 - Federal Income Tax

      • Specified investment flow-through (SIFT) trust income and distribution tax calculations

      Due to the limitation of time, the following form will be updated in a future version:

      • T184 - Capital Gains Refund To a Mutual Fund Trust

   4. New Brunswick budget for 2016 and 2017

      The general corporate income tax rate for New Brunswick will increase from 12% to 14% effective April 1, 2016. This new rate will be reflected in Chart 8 of the Specified investment flow-through (SIFT) trust income and distribution tax calculations.

   5. Graduated tax rates

      For tax years that begin after 2015, grandfathered inter vivos trusts, trusts created by will, and certain estates will no longer be subject to tax at the graduated tax rates. Instead, they will be subject to tax at the highest federal and provincial tax rates.

      The graduated tax rates will still apply, however, only to the two new types of trusts created: the Graduated Rate Estate (GRE) and the Qualified Disability Trust (QDT). These options are available with the keyword Trust-Type when it is a testamentary trust.

      The option for Graduated Rate Estate should only be chosen if the following conditions are met:

      • That the estate is no more than 36 months in existence;

      • The estate is a testamentary trust;

      • The individual's social insurance number or other information acceptable to the Minister is provided in the estate's return;

      • The estate designates itself as the graduated rate estate of the deceased individual; and

      • No other estate designates itself as the graduated rate estate of that individual.

      A Qualified Disability Trust for a tax year is a testamentary trust that makes a joint election in its T3 return to be a qualified disability trust for the year. The joint election must be made together with one or more beneficiaries of the trust. Other conditions outlined in the T4013, T3 trust guide, must also be met in order to be considered as a Qualified Disability Trust.

      The calculation of the following forms has been affected by this new tax measure:

      • Schedule 11

      • TP-646

      • All provincial tax forms (T3AB, T3BC...)

      • T3MJ

   6. Special tax rules

      Testamentary trusts and grandfathered inter vivos trusts used to qualify for certain special tax rules. The following tax measures will now apply only to GRE:

      • The basic exemption of $40,000 in computing alternative minimum tax, which affects the following forms:

        • Schedule 6

        • Schedule 12, line 28

        • TP-776.47, line 57

      • Exclusion from Part XII.2 tax. (Schedule 10, lines 1 to 14);

      • Designating an investment tax credit to beneficiaries (Beneficiary income allocation schedule)

      • Exemption from the requirement to pay tax by instalments.* (Instalment schedules)

      * Note: To properly calculate instalments for testamentary trusts in 2016, it is important to manually enter the net amount of federal and Quebec tax owed for the two prior years within the Trust-Hist group. For 2015 and onwards, this information will automatically be carried forward.

      Only GREs will be allowed to have a non-calendar year end. All other trusts will have to have a December 31 year-end, even the QDT.

   7. New CCA classes

      The following new CCA classes have been added in the options for the keyword CCA-Class :

      1. Class 1 - 10% (LNG after February 19, 2015)

         Accelerated CCA for liquefied natural gas (LNG) after February 19, 2015 and before 2025.

         Non-residential buildings at a facility that liquefies natural gas are eligible for a CCA rate of 4% plus the lesser of 6% and income from eligible liquefaction activities attributable to that facility.

      2. Class 47 - 30% (LNG after February 19, 2015)

         Accelerated CCA for liquefied natural gas (LNG) after February 19, 2015 and before 2025.

         Eligible property used for the liquefaction of natural gas are eligible for a CCA rate of 8% plus the lesser of 22% and income from eligible liquefaction activities attributable to that facility.

      3. Class 53 - 50% (after 31 Dec. 2015 & bef. Jan. 2026)

         Class 53 includes machinery and equipment used in Canadian manufacturing acquired after 2015 and before 2026.

   8. Requirement to file RL-16 for a trust residing in Canada, outside Quebec

      DT Max T3 will now automatically generate the required RL-16 slip (Relevé 16) and Schedule C for a trust residing in Canada, outside Quebec, who allocated a capital gain or income to a beneficiary residing in Quebec, even if the trust had no Quebec income tax return to file. The RL-16 and Schedule C must be submitted together to Revenu Québec.

3. Revised forms

   Federal:

   • T1055 - Summary of Deemed Dispositions

   • T3-RCA - Retirement Compensation Arrangement (RCA) Part XI.3 Tax Return

   • TX-19 – Asking for a Clearance Certificate

   In-house forms and schedules:

   • Schedule of Charitable Donations - Quebec

   • Client letter

     The following paragraph was added to the client letter in respect to that requirement to file an RL-16 slip for Quebec beneficiaries of Canadian trusts, outside Quebec:

     The following forms should be submitted together to Revenu Québec:

     • Quebec Schedule C, Summary of allocations and designations

     • RL-16 slip(s)

4. New keywords

   1. In the CCA-Class keyword group :

      LNG-Income : Income from liquefied natural gas (LNG) for the year

      Use the keyword LNG-Income to enter the income for the year from the eligible liquefaction activities in respect of the eligible liquefaction facility.

5. New options

   1. For the keyword Donations . This option should be used to enter the eligible amount of food donations made after March 26, 2015, which will be increased by 50% to calculate the donation tax credit:

      Food donation by farming businesses (after March 26, 2015)

   2. For the keyword Trust-Type :

      Graduated rate estate (GRE)
      Qualified disability trust