Line 628 - Additional deduction -
credit unions
Note
This additional deduction is cancelled. The last year for which you
can claim it is 2016. See details below.
Although a credit union is not generally considered a private corporation, it is eligible for the small business deduction. A credit union can also deduct a percentage of its taxable income that was not eligible for the small business deduction.
For tax years ending after March 20, 2013, the amount of the additional deduction that credit unions can calculate for income that is not eligible for the small business deduction is being phased out as follows: 80% for 2013, 60% for 2014, 40% for 2015, 20% for 2016, and 0% after 2016. The amount is prorated for tax years that include March 21, 2013, and for all tax years during the phase-out period that do not coincide with the calendar year.
The additional deduction is 17.5% (17% before 2016) of whichever of the following amounts is less:
-
the taxable income for the year; or
-
4/3 of the maximum cumulative reserve at the end of the year, minus the preferred-rate amount at the end of the previous tax year;
minus
-
the least of lines 400, 405, 410, and 427 of the small business deduction calculation (page 4 of the return).
Generally, a credit union's maximum cumulative reserve is equal to 5% of the amounts owing to members, including members' deposits, plus 5% of all members' share capital in the credit union.
The preferred-rate amount at the end of a tax year is equal to the total of the preferred rate amount at the end of the previous year, plus 100/17.5 (100/17 before 2016) of the amount of the small business deduction for the year.
Both the additional deduction and the preferred-rate amount are prorated for tax years that straddle January 1, 2016.
Use Schedule 17, Credit Union Deductions, to claim this additional deduction.
On line 628, enter the credit union's additional deduction.
Reference
Section 137
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