11 January 1990 Income Tax Severed Letter ACC90076 - Form T2203A - Forward Averaging Supplement - Multiple

January 11, 1990

Assessing & Enquiries Directorate     Technical Interpretations
J.M. Legault                            Division
Director - Returns Processing         G.D. Middleton
             Division                 957-9230

Nancy Kelly

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 Buetow A/Director Technical Interpretations Division Legislative 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.