SCHEDULE 1 - DETAILED TAX CALCULATION (LINES 500 TO 518) The following instructions are in the order of the lines as they appear on Schedule 1. If you have to pay minimum tax or you are claiming an overseas employment tax credit, see Forms T691 or T626 before completing Schedule 1. TOTAL FEDERAL INCOME TAX ON TAXABLE INCOME Calculate this using the "1993 Rates of Federal Income Tax" at the top of Schedule 1. EXAMPLE: Mary's taxable income for 1993 is $57,550. She calculates her federal income tax using the rates at the top of Schedule 1. She finds the amount closest to her taxable income that is not more than $57,550. She then subtracts $56,550 from $57,550. Her tax on $56,550 is $12,158. The remaining $1,000 is taxed at 29% based on the rates on Schedule 1. She completes her Schedule 1 as follows: Mary's taxable income $57,550 On the first 56,550 tax is $12,158 On remaining $1,000 tax is 29% is 290 Total federal income tax on taxable income $12,448 LINE 500 - TAX ADJUSTMENTS Use this line to add to your tax part of your dependants' income if you claimed medical expenses for them. See line 330 for details. LINE 501 - TOTAL NON-REFUNDABLE TAX CREDITS Enter your total non-refundable tax credits (from line 350). LINE 502 - FEDERAL DIVIDEND TAX CREDIT If you reported dividends on line 120, enter the dividend tax credit on line 502. This amount is the total of the dividend tax credits from taxable Canadian corporations shown on the dividend information slips. For dividends paid in 1993, the dividend tax credit is 13 1/3% of the taxable dividends from taxable Canadian corporations. LINE 504 - MINIMUM TAX CARRY-OVER If you paid minimum tax for 1986, 1987, 1988 or 1989 you may be able to deduct part or all of that tax from your 1993 taxes payable. To calculate your claim, complete Part VIII of Form T691, Calculation of Minimum Tax. Attach the completed form to your return. LINE 506 - BASIC FEDERAL TAX Your basic federal tax is a subtotal you use for certain calculations. For example, the federal individual surtax is a percentage of your "Basic Federal Tax". OVERSEAS EMPLOYMENT TAX CREDIT To make your claim . use Form T626, Overseas Employment Tax Credit Calculation; . enter the result of the calculation on line 506, "Basic Federal Tax"; and . complete the rest of Schedule 1 in the usual way. For details, get Interpretation Bulletin IT-497R2, Overseas Employment Tax Credit. LINES 507 AND 508 - FEDERAL FOREIGN TAX CREDIT This credit is for foreign income or profits taxes that you paid on income received from outside Canada. Certain tax treaties with other countries may affect your eligibility for this credit. In most cases, the foreign tax credit you may claim for each foreign country is the smaller of the following two amounts: . the foreign income tax actually paid, or . the tax due to Canada on your net foreign business and non- business income from that country. "Net foreign non-business income" means foreign income (before deducting the foreign tax) minus . allowable expenses, such as carrying charges you paid to earn your foreign income; . any capital gains deduction you claimed against your foreign capital gains; and . any foreign income that is tax-free in Canada because of a tax treaty. HOW TO CLAIM . Complete the federal foreign tax credit area on Schedule 1 and attach the Schedule to your return. For a more detailed calculation, complete Form T2209, Calculation of Federal Foreign Tax Credit, and attach it to your return. . Also attach a note showing your calculations. Show all amounts in Canadian funds. . Provide proof, such as an official receipt, showing the foreign taxes paid. . If you paid foreign taxes to the U.S., attach a copy of your W2 information slip, U.S. 1040 return or any other supporting document (if it applies). . If you were a member of a partnership and are entitled to claim a portion of foreign taxes it paid, include in your calculation the amount shown in the financial statements or in Box (M) and Box (N) of your T5013 Supplementary. You must make a separate calculation for each country for which you claim a foreign tax credit, unless the total taxes paid to all foreign countries do not exceed $200. A separate calculation is also required for business income taxes and non-business income taxes paid to each foreign country. Unclaimed foreign business income taxes may be carried back three years and forward seven years. TAX TIP Your federal foreign tax credit may be less than the tax paid to a foreign country. If so, you may get a further credit against Ontario income tax. Calculate your Ontario foreign tax credit on Form T2036, Calculation of Provincial Foreign Tax Credit, and attach a completed copy to your return. For more details on how to calculate your claim, get Interpretation Bulletin IT-270R2, Foreign Tax Credit. LINE 510 - INDIVIDUAL SURTAX You must pay a 5% individual surtax if you have basic federal tax payable of $15,000 or less. If your basic federal tax is more than $15,000, you must pay a surtax of 5% on the first $15,000 and 8% on the rest. LINE 511 - ADDITIONAL FEDERAL FOREIGN TAX CREDIT If you have claimed a foreign tax credit, you may be able to claim any other federal foreign tax credit (calculated on Part II of Form T2209) on line 511 and deduct it from the individual surtax amount on line 510. LINE 518 - ADDITIONAL INVESTMENT TAX CREDIT You may also be able to reduce your individual surtax by a part of your unused investment tax credit available for 1993. See Section II of Form T2038(IND.) for details. LINE 419 OF SCHEDULE 1 - FEDERAL INDIVIDUAL SURTAX Subtract line 518 from line 517. Enter the result on line 419 on the schedule and line 419 on your return. ONTARIO INCOME TAX Refer to the "ONTARIO TAX AND CREDITS" section for details. To determine your Ontario tax, use Table B, or if you are eligible for Ontario Tax Reductions, complete Form T1C(ONT.)TC., Ontario Income Tax. If you (or the deceased person) had income from a business with a permanent address outside Ontario, use Form T2203, Calculation of Tax in Respect of Multiple Jurisdictions, to calculate Ontario tax. ONTARIO TAX AND CREDITS ONTARIO TAX Ontario tax is the amount of income tax charged by the Province of Ontario and collected for it by the federal government. You must pay Ontario income tax if you . lived in Ontario on December 31, 1993, . lived in Ontario on the date you emigrated from Canada, . were a "factual" resident of Ontario on December 31, 1993, or . are filing a return for a person who died in 1993 but who lived in Ontario at the time of death. The "Basic Ontario Income Tax" is 53% of the "Basic Federal Tax" (line 506 on Schedule 1). In addition, an "Ontario Surtax" of 10% is calculated on the "Basic Ontario Income Tax" in excess of $10,000. ONTARIO TAX REDUCTION Individuals subject to Minimum Tax (from Form T691) are not eligible for Ontario Tax Reduction. A basic Ontario Tax Reduction applies to individuals with Ontario income tax of $167 or less. The basic Ontario Tax Reduction has been taken into account in calculating the Ontario taxes payable shown in Table B. However, you may be eligible for more than the basic tax reduction. In this case, you must complete Form T1C(ONT.)TC Ontario Income Tax, to determine your tax reduction and Ontario taxes payable. You are eligible for an additional tax reduction, if you supported a child aged 18 or under or a dependant with a disability. You may claim $200 for each child 18 or under and $200 for each disabled person, regardless of age, whom you claimed as a dependant on your Federal Income Tax Return. Individuals supporting a disabled child 18 or under may claim both supplements for a total of $400. If Ontario income tax is less than or equal to your total personal amount, no Ontario income tax is payable. Your total personal amount is the sum of the basic personal amount of $167, plus the additional amounts you claim for children and disabled dependants. If Ontario income tax is greater than your total personal amount, the Ontario Tax Reduction is calculated as three times the total personal amount less two times Ontario income tax. EXAMPLE 1: Janet's Basic Ontario Tax is $637.59, based on 53% of her Basic Federal Tax of $1,203. Janet has a dependant child under the age of 18 who is disabled. Janet is eligible for the basic Ontario Tax Reduction of $167, plus $200 for her dependant child, plus another $200 because that child is disabled, for a total personal amount of $567. To calculate her Ontario tax reduction: Enter: 3 x personal amount ($567) $1,701.00 Less: 2 x Ontario income tax $1,275.18 Ontario Tax Reduction $ 425.82 Janet's Ontario tax payable is her Basic Ontario Income Tax, less her Ontario Tax Reduction ($637.59 - $425.82) or $211.77. EXAMPLE 2: Louisa's Basic Ontario Income Tax is $637.59 based on 53$ of her Basic Federal Tax of $1,203. Louisa has two dependant children under the age of 18, one of whom is disabled. Louisa is eligible for the basic Ontario Tax Reduction of $167, plus $200 for each dependant child, plus another $200 because one child is disabled, for a total personal amount of $767. Because Louisa's Ontario income tax is less than the total personal amount of $767, no Ontario income tax is payable by her. EXAMPLE 3: Andre's Basic Ontario Tax is $637.59, based on 53% of his Basic Federal Tax of $1,203. Andre has a dependant child under the age of 18. Andre is eligible for the basic Ontario Tax Reduction of $167, plus $200 for his dependant child, for a total personal amount of $367. To calculate his Ontario Tax Reduction: Enter: 3 x personal amount ($367) $1,101.00 Less: 2 x Ontario income tax ($637.59) $1,275.18 Ontario Tax Reduction $ 0.00 Andre is not entitled to an Ontario tax reduction; therefore his Ontario income tax payable is $637.59. ONTARIO TAX CREDITS The Ontario Tax Credit System consists of: . Property Tax Credit . Sales Tax Credit . Political Contribution Tax Credit . Ontario Home Ownership Savings Plan Tax Credit Your combined family income is used to determine eligibility for Property Tax Credits, Sales Tax Credits and Ontario Home Ownership Tax Credit but not the Ontario Political Contribution Tax Credit. However, the Ontario Political Contribution Tax Credit can only be used to reduce Ontario tax payable. Ontario Tax Credits must be calculated on Form T1C(ONT.) included with the schedules. Details are provided on the page accompanying the Form T1C(ONT.). ONTARIO HOME OWNERSHIP SAVINGS PLAN TAX CREDIT The Ontario Home Ownership Savings Plan was introduced in 1988. The tax credit is calculated and claimed on Form T1C(ONT.) for qualifying contributions made to an Ontario Home Ownership Savings Plan (OHOSP) in the calendar year. Completed and signed receipts must be attached. Further details are available on the page accompanying Form T1C(ONT.).