| January 11, 1990 | |
| Assessing & Enquiries Directorate | Technical Interpretations |
| J.M. Legault | Division |
| Director - Returns Processing Division | G.D. Middleton |
| 957-9230 | |
| Nancy Kelly |
Subject: Form T2203A - Forward Averaging Supplement - Multiple Jurisdictions
In accordance with your request of October 25, 1989, we have reviewed the above-mentioned form. We apologize for the delay in our review.
Our comments are summarized in the attached appendix and are based on the provisions of the Income Tax Act as proposed to be amended by Bill C-28. Unless otherwise indicated, the references to sections, subsections, etc., are to the Income Tax Act (the "Act"). We are also enclosing a mock-up copy of form T2203A which contains other handwritten comments which you may wish to consider. The comments in the appendix supersede the previous informal comments which we sent to you on December 14, 1989.
This form is not a form prescribed by the Income Tax Act or Income Tax Regulations and there is no indication on the form that it is "authorized by the Minister". Accordingly, the taxpayer is not obliged to use this form. If you want taxpayers to complete this form, there should be an indication on the form that it is authorized by the Minister.
There is also no reference to the Privacy Act or Personal Information Bank on the form.
If you have any questions, please contact us.
Bernhard BuetowA/DirectorTechnical Interpretations DivisionLegislative and Intergovernmental Affairs Branch
Re: Form T2203A Appendix Page 1
1. The amount to be entered at line 4(b) on page 3 represents the amount calculated under paragraph 120.1(3)(b). Presently, the rate referred to in that paragraph is 4% not 49.5%.
21(1)(b)
2. In connection with item 1. above, we noted that there is no line on the form to calculate an amount under paragraph 120.1(3)(b).
3. The amounts calculated under subsections 120.1(1) and (2), as adjusted by subsection 120.1(3), should increase or decrease the amount of "tax otherwise payable" as defined in paragraph 120(4)(c). This defined amount is generally referred to as the "basic federal tax" amount and is the amount used in computing provincial taxes and certain federal tax credits. Thus, provincial tax is increased or decreased as a result of amounts calculated under subsections 120.1(1) and (2).
(a) In situations where subsection 120.1(1) and/or (2) apply and subsection 120.1(3) does not apply, some provincial tax credits will be calculated incorrectly because the provincial tax amount used for calculating such credits is not reduced or increased by the provincial tax amounts determined on this form and on forms T-581 and T-541.
(b) 21(1)(b)
4. 21(1)(b)