This release extends certification for the preparation of federal T2 and Alberta AT1 tax returns to include corporations with year ends up to October 31, 2019. It also includes changes to other tax modules.
This version is available as a full download from our website and an automatic update. (To deploy auto-update files from your own network, see the Auto-update files page.)
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T2 and AT1 certification extension
TaxCycle is certified for the preparation and filing of federal T2 and Alberta AT1 corporate tax returns with tax year ends up until October 31, 2019. (For Québec CO-17 returns, TaxCycle continues to support year ends ending in 2016 up to October 31, 2019.)
T2 conversion message
When you open an existing return, TaxCycle may prompt you to convert it to the new module (as shown below):
This happens when the workflow status of the T2 return you are working on is other than Completed and the corporation's tax year starts on or after January 1, 2017. To see the workflow status, go to File and click Info. To learn more about T2 file name extensions, read the section on the "T2 file name extensions" in the Create a T2 tax return help topic.
T2 AgriStability/AgriInvest EFILE New
TaxCycle T2 has received certification from the Canada Revenue Agency (CRA) for electronic filing of the AgriStability and AgriInvest forms.
- The CRA started accepting AgriStability/AgriInvest electronically-filed form submissions on June 20, 2019.
- Upon opening, the CRA will only accept forms transmitted with tax years beginning and ending in either 2017 or 2018. It is anticipated that the CRA will accept 2019 year-ends later in 2019. In the meantime, forms with a 2019 year-end must be mailed to the appropriate tax centre.
- This service is only available for farms in harmonized provinces and territories (Newfoundland and Labrador, Nova Scotia, New Brunswick, Manitoba, British Columbia and Yukon), whose forms were previously processed in the CRA's Winnipeg tax centre.
- Alberta, Saskatchewan, Ontario and Prince Edward Island have other forms—also available in TaxCycle T2—that must be submitted by mail to the tax centre required by each province, or, for Ontario, may need to be completed online.
To transmit the AgriStability/AgriInvest forms:
- Answer Yes to the AgriStability/AgriInvest question in the Business Activity section on the Info worksheet.
- If the corporation operates in only one province, the province of main farmstead field completes automatically. If corporation operates in multiple provinces, the field becomes editable and you must select the province or enter it on the AGRI worksheet.
- Complete the AGRI worksheet. To see the T2 AGRI transmission box in the Transmit sidebar, you must enter codes and amounts on this form, not just information at the top of the form.
- Click Transmit in the sidebar, or press F12.
- Click once on the T2 AGRI box to expand it.
- Resolve any outstanding errors preventing filing of the forms, then click Click the Transmit Now! link to begin the transmission.
For more details, read the T2 AGRI EFILE help topic.
New T2 forms
- Schedule 35—Taxable Capital Employed in Canada - Large Insurance Corporations
- Schedule 38—Part VI Tax on Capital of Financial Institutions
- Schedule 42—Calculation of Unused Part I Tax Credit
- Schedule 303—Newfoundland and Labrador Direct Equity Tax Credit
- Schedule 305—Newfoundland and Labrador Capital Tax on Financial Institutions
- Schedule 306—Newfoundland and Labrador Capital Tax on Financial Institutions - Agreement among related corporations
- Schedule 367—New Brunswick Small Business Investor Tax Credit
- CO-17—5-year and 1-year summaries
Updated T2 forms
- When the corporation's type at the end of the previous tax year differs from the corporation type at the end of the current tax year, TaxCycle triggers a review message to provide the date the corporation type changed. In this example, the corporation has a calendar tax year end and the corporation was a CCPC on December 31, 2017.
- If the corporation type changed on March 1, 2018 (for the tax year ending on December 31, 2018), then the corporation type changed during the tax year and the date the corporation type changed must be entered.
For this purpose, if the corporation type changed to public corporation on January 1, 2018, the corporation type did
not change during the tax year but rather since the last tax year. Therefore, the date the corporation type changed during the tax year must not be entered.
- In this case, answer Yes (as shown) and the review message to provide the date the corporation type changed will disappear.
A new section was added for RDTOH for tax years starting after 2018:
- Removed check box 210 (Schedule 10), 249 (Schedule 46) on page 2 as well as line 628 (Credit union additional deduction) on page 7.
- New lines: 417, 422 and 428 on page 4; 520, 525, 530, 535, 540, 545, 570 and 575 on page 7.
- Removed the enclosed payment field on the last page of the T2 jacket.
- As per the March 19, 2019 federal budget, added new field to enter a refundable labour credit related to a Qualified Canadian Journalism Organization (QCJO) has been added.
Lines 108 and 405 are no longer applicable because Schedule 10 for cumulative eligible capital deduction has been removed. These lines remain in Schedule 1 for comparative purposes only and the line numbers have been removed. The same change has been made to the S1 5-year Comparative Summary. For the removal of Schedule 10, please refer to the section on Schedule 10 below.
- Line 510, Gifts of ecologically sensitive land before February 11, 2014, has been removed.
- The donation table at the top of the schedule has been revised to exclude the column related to Gifts of ecologically sensitive land before February 11, 2014.
- Schedule 3 has been substantially updated.
- The following new lines have been added: 242, 265, 440, 455, 465, and 470.
- Ontario: Removed line 274 (Ontario additional tax re: Crown royalties).
- Manitoba: Added new line number 328 to an existing line for Manitoba child care centre development tax credit and line 889 for its certificate number.
Schedule 7 and S7WS
- Schedule 7 has been substantially updated.
- Part 2 is a new section to calculate adjusted aggregate investment income (AAII) for the current tax year.
- S7WS has been added to facilitate the calculation of Part 2 of Schedule 7.
Schedule 8 and S8Asset
The S8Asset has been substantially revised.
The March 2019 federal budget introduced new CCA classes 54 and 55 for zero-emission vehicles. This new measure applies to purchases after March 18, 2019 and allows for 100% of CCA to be claimed in the year of addition subject to short tax year proration.
Class 54 is for zero-emission vehicles that would otherwise be included in Class 10 or 10.1. Class 55 is for zero-emission vehicles that would otherwise be included in Class 16. In the case of Class 54, there will be a limit of $55,000 (plus sales taxes) on the amount of CCA deductible in respect of each zero-emission passenger vehicle. This new $55,000 limit will be reviewed annually to ensure it remains appropriate.
To be eligible for this first-year enhanced allowance, a vehicle must:
- be a motor vehicle as defined in the Income Tax Act (i.e. an automotive vehicle for use on streets and highways, but not including a trolley bus or vehicle operated exclusively on rail);
- otherwise be included in Class 10, 10.1 or 16;
- be fully electric, a plug-in hybrid with a battery capacity of at least 15 kWh or fully powered by hydrogen; and
- not have been used, or acquired for use, for any purpose before it is acquired by the taxpayer.
Vehicles in respect of which assistance is paid under the new federal purchase incentive announced in Budget 2019 will be ineligible.
When class 43.1 or 43.2 is selected, additional information must be provided in the new table that appears on the bottom of Schedule 8. In this table, codes 23 and 24 have been removed from column 301. The description for the existing code 09 has been revised to “Geothermal energy equipment”.
Schedule 10 and S10WS
Schedule 10 and S10WS have been removed.
As of tax years that begin after 2016, eligible capital property must be entered in Schedule 8 under class 14.1. For further information, refer to the Schedule 10, AT1 Schedule 14, and class 14.1 help topic.
In addition, the corresponding forms for Alberta (AS14, AS14Supplemental) and Québec (CO-130.B) have also been removed.
Schedule 31 and 49 expenditure limit calculation for a tax year ending after March 18, 2019
- For CCPCs, a fully refundable enhanced tax credit at a rate of 35% is available on up to $3 million qualifying SR and ED expenditures annually. This expenditure limit for a taxation year is gradually phased out based on two factors, which apply on the basis of an associated group.
- The expenditure limit is reduced where taxable income for the previous taxation year is between $500,000 and $800,000.
- The expenditure limit is also reduced where taxable capital employed in Canada for the previous taxation year is between $10 million and $50 million.
- Budget 2019 proposed to repeal the use of taxable income as a factor in determining a CCPC’s annual expenditure limit for the purpose of the enhanced SR and ED tax credit. As a result, small CCPCs with taxable capital of up to $10 million will benefit from unreduced access to the enhanced refundable SR and ED credit regardless of their taxable income. As a CCPC’s taxable capital begins to exceed $10 million, this access will gradually be reduced.
- If the reporting corporation is not associated with any other corporations and its tax year ends after March 18, 2019, the following field in Schedule 31 Part 10 will calculate to be $500,000 so that the excess (“expenditure limit”) is calculated to be the entire $3,000,000 of expenditure limit.
- If the reporting corporation is associated with at least one corporation and its tax year ends after March 18, 2019, amount A in Schedule 49 page 2 will calculate to be $500,000 so that the excess (“expenditure limit”) is calculated to be the entire $3,000,000 of expenditure limit.
Effective for qualifying property acquired after June 30, 2019, the refundable portion of the Manufacturing Investment Tax Credit (MITC) is reduced from 8% to 7%. This change does not impact the tax credit on qualified property acquired before July 1, 2019. The 1% non-refundable MITC is not impacted by this change. New fields have been created to account for the capital costs and tax credits for the expenditures incurred after June 30, 2019.
When the gross revenue of the reporting corporation (line 5 in section 2) is zero, a review message prevented the T106 from being EFILE eligible. You can now sign off on this review message.
New fields added to FederalInstalments worksheet help facilitate the calculations for the two questions at the bottom.
Taxable income and capital for the previous tax year (the year for which you are working on the tax return) will be calculated based on the data in the CGI form. When you open an existing tax return in this release, the answers to the two questions will be retained as overrides in order to not alter the data as previously entered.
Other updated T2/AT1 forms
- Schedule 17—Updated.
- Schedule 20—Line 202 removed.
- T1131 (Schedule 47)—Removed lines 305 and 306 for a range of dates related to certificates issued before April 1, 2010.
- T1177 (Schedule 48)—Removed lines 305 and 306 for a range of dates related to certificates issued before April 1, 2010.
- S422/T1196 (BC)—Updated.
- Schedule 389—minor update (MB).
- Schedule 394—minor update (MB).
- AT1 jacket—Lines 83 and 84 were removed. New lines 085 and 110 Interactive Digital Media Tax Credit (IDMTC).
Alberta AT1 small business rate reduction
As announced on May 18, 2019, the United Conservative Party of Alberta announced the following corporate tax rate reductions in Bill 3 (“Job Creation Tax Cut“).
Small business tax rates are reduced:
- As of 2019/07/01 9%
- As of 2020/01/01 8%
- As of 2021/01/01 7%
- As of 2022/01/01 6%
Basic corporate tax rates are reduced:
- As of 2019/07/01 11%
- As of 2020/01/01 10%
- As of 2021/01/01 9%
- As of 2022/01/01 8%
T1135 EFILE from TaxCycle T5013 New
TaxCycle T5013 is now certified by CRA for electronically filing the T1135 Foreign Income Verification Statement. The process for T1135 EFILE is similar to that in TaxCycle T1 and T2. Please refer to the T1135 EFILE help topic to learn more.
- A variance column was added to the RL-15 along with an option to allocate variance to the last slip or do nothing (for 2019 only).
- Resolved—The allocation method number 4, Manual allocation, now correctly changes all fields to edit fields so an override is not required (for 2018 and 2019).
- Resolved—The allocation method number 3, Manual entry of % ownership, the function now correctly changes the percentage of ownership field to an edit field so an override is not required (for 2018 and 2019) and amounts allocate correctly for all partnership types.
- GIFI schedules S100, S125, S140 and S141: The CRA has just confirmed that ALL amounts must be reported with dollars and cents. We have therefore readjusted the GIFI schedules S100, S125, S140 and S141 accordingly.
You can now enable calculated totals on the 5-year summary.
- To help avoid duplicate entries, a new review message was added to remind you to verify mutual funds if T5008 slips and manual entries are present in the return.
- Net capital loss carryback in year of death: If there is a net-capital loss in the year of death, it will be applied to line 127 of the tax return. Should the user then decide to claim some of that loss in a previous year on the T1A, the amount on line 127 will be reduced by the amount carried back to a previous year. This was reported on the protaxcommunity.com.
- Interest and Penalty Worksheet: an issue was resolved related to the miscalculation of the interest and penalty when the filing due date is June 15.
- S508—Other assistance field is now calculated to be the total of T661 lines 515, 516, 517 and 518 in Part 4 of T661.
- S508WS—A new line was added under the current expenditure column to account for government and non-government assistance.
- Saskatchewan capital tax return (SCT1)—Line 6 (Total surpluses) in Part 1 of Schedule B now allows a negative number as the total amount.
- GIFI—Re-importing data into S140 now imports amounts for GIFI codes 9990 and 9995.
- T2AFR—The postal code mismatch message has been fixed. This was reported on the protaxcommunity.com.
- ClicSÉQUR for CO-17—A password field was added to CO17Online worksheet for entering password assigned by Revenu Québec to the client or the client’s representative when registering with My Account for businesses online.