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Notice: The information on this page is only for users of Personal Taxprep 2018. If you are using Personal Taxprep Classic 2018, consult the help available in the program. |
Applicability
Form T2203 is used where all or part of the taxpayer's business income (self-employment) for the year was earned and is allocable to a permanent establishment outside his or her province of residence or outside Canada.
Allocation of Income
There are situations where, at the end of the year, a person resides in a province or territory of Canada, but all or part of the person’s business income for the year was earned and can be allocated to a permanent establishment outside that province or territory, or outside Canada. If this is your case, you have to determine the part of your total provincial or territorial tax that is payable to the jurisdiction where you reside and to the other jurisdictions in Canada.
Only businesses with profits are taken into account. The program allocates any excess self-employment income to the province of residence. Enter the self-employment income allocated to each jurisdiction in the column indicated. The amount allocated should equal the amount of self-employment income indicated on line 2.
The same rules apply if you were a non-resident of Canada throughout the year who carried on business in more than one province or territory in Canada.
Automatic allocation
T2203 – Automatic allocation to each jurisdiction
The following instructions are taken from the current version of Form T2203.
Provincial or territorial income tax relating to business income is generally payable to the province or territory where the permanent establishment generating that income is located.
There are situations where, at the end of the year, a person resides in a province or territory of Canada, but all or part of the person's business income, including income received as a retired, inactive, or limited partner, for the year was earned and can be allocated to a permanent establishment outside that province or territory, or outside Canada. If this is your case, you have to determine the part of your total provincial or territorial tax that is payable to the jurisdiction where you reside and to the other jurisdictions in Canada.
The same rules apply if you were a non-resident of Canada throughout 2018 carrying on business in more than one province or territory in Canada or receiving income from an office or employment that can reasonably be attributed to duties performed in more than one province or territory in Canada.
Tax and multiple jurisdictions
When tax is payable to multiple jurisdictions, provincial/territorial tax rates are applied to the taxable income from all sources and, with certain restrictions relating to residency, non-refundable and some other tax credits are fully allowed to calculate a "basic provincial/territorial tax." The basic tax is then prorated, by applying the percentage of income allocated to that province or territory.
Form T2203 accommodates this calculation for the province or territory of residence and for all jurisdictions where business income was earned. It contains modified versions of Form 428 for all provinces and territories and the related schedules that you need to calculate your provincial/territorial taxes for 2018.
Form T2203
Form T2203 includes the following components:
Part 1 – Allocating income to multiple jurisdictions (common to all, complete in all cases);
Part 2 – Federal surtax on income you earned outside Canada and refundable Québec abatement (complete if income is allocated to "Other" or to Quebec);
Part 3 – Non-refundable tax credits (complete the applicable column for each province/territory to which income is allocated for 2018);
Part 4 – Provincial or territorial tax (multiple jurisdictions) (complete for each province/territory that income is allocated for 2018);
Part 5 – Provincial and territorial tax (common to all, complete to summarize your total provincial or territorial tax).
Additional provincial and territorial credits allowed to residents
and non-residents of a province or territory
In addition to the credits included in Part 4 of Form T2203, you may be eligible for certain other tax credits. The chart at the back of this package identifies additional provincial and territorial credits, and the forms that you need to complete to claim them.
Many of these credits are limited to the amount of tax payable to the province or territory; when this amount is required (i.e., you are instructed to enter the amount from line 428 of your return or from a line of regular provincial/territorial Form 428), use the applicable provincial or territorial tax amount from lines 1 to 12 in Part 5 of Form T2203.
Include these credits on line 479 of your return and attach the completed forms to your return.
For more information, call 1-800-959-8281.
Provincial and territorial credits not included in this package
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Province or territory |
Other credits |
Form |
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Newfoundland and Labrador |
Newfoundland and Labrador research and development tax credit (individuals) |
T1129 |
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New Brunswick |
New Brunswick residents only:
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Ontario |
Ontario tax credits for self-employed individuals Ontario residents only: |
ON479
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Manitoba |
Paid work experience tax credit Manitoba residents only: Personal tax credit |
MB479
MB479 |
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British Columbia |
British Columbia venture capital tax credit British Columbia residents only: |
BC479
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Yukon |
Labour-sponsored venture capital corporation tax credit Yukon residents only:
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YT479
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Northwest Territories |
Northwest Territories residents only:
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Nunavut |
Political contribution tax credit Nunavut residents only:
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NU479
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To get copies of these forms and provincial and territorial information sheets, go to https://www.canada.ca/en/revenue-agency/services/forms-publications.html or call the Canada Revenue Agency at 1-800-959-8281.