THIS GUIDE IS NOT INTENDED TO REPLACE THE CORPORATION CAPITAL TAX ACT AND REGULATIONS. IF THERE IS ANY CONFLICT BETWEEN THE WORDING USED IN THIS GUIDE AND THE LEGISLATION, THE LEGISLATION SHALL PREVAIL.
This guide provides information to aid in the completion of the Corporation Capital Tax (CCT) Special Return 01 - 2003 & Later and related schedules. The CCT Special Return 01 – 2003 & Later is effective for taxation years starting on or after September 1, 2002 and ending before April 1, 2008 for all financial corporations.
If you require further information or clarification, contact the Income Taxation Branch, Ministry of Finance, PO Box 9444 Stn Prov Govt Victoria BC V8W 9W8. Telephone: 250 953-3082 or Fax 250 356-0434.
The return must be filed by a financial corporation subject to the CCT with a permanent establishment in British Columbia and Net Paid Up Capital equal to or greater than the threshold amount.
A financial corporation, as defined in the Corporation Capital Tax Act ("Act"), is:
|
Taxation Year |
Threshold Amount |
Ending after December 31, 2000 and |
$5.0 million |
|
Ending after March 31, 2003 |
$10.0 million |
If a financial corporation is a member of an associated group of financial corporations, the Net Paid Up Capital of the member financial corporations must be added together to determine if the Net Paid Up Capital of the group is above the threshold amount.
If an associated group of financial corporations is subject to CCT, a separate return must be filed by each member corporation.
If a financial corporation or an associated group of financial corporations determines that it is not taxable, and the total assets of the financial corporation or the associated group of financial corporations exceed the threshold amount, the Income Taxation Branch (the Branch) recommends that the financial corporation or each member of the associated group files a return as instructed below. The Branch will then have all the information necessary to determine that the financial corporation or the associated group of financial corporations is not taxable and will not send out a demand to file.
Similarly, financial corporations that become exempt, as per section 4 of the Act, should advise the Branch by filing a return as instructed below (see exempt financial corporations).
A signed copy of the return must be filed within 184 days of the financial corporation's taxation year-end and delivered to the Minister of Finance:
The postmark date or the date the courier delivers the return is the filing date.
The following items must accompany the CCT return:
A financial corporation with estimated taxes payable in excess of $3,000 must pay instalments. Estimated taxes payable must be determined by using either of the following methods:
(Caution: If the second method is used and the estimate is less than the actual tax for the year and the preceding year's annualized tax, penalties and interest will be levied.)
Instalments must be paid by the 15th day of the 4th, 7th, 10th and 13th months from the beginning of the financial corporation's current taxation year.
For example, if the taxation year begins on January 1, instalments are due on April 15, July 15, October 15 and January 15 (of the following year). If the taxation year begins on September 27, instalments are due on December 15, March 15, June 15 and September 15.
A confirmation of the instalment amounts paid is mailed out 75 days after the financial corporation's taxation year end.
The final balance of tax owing, net of any instalments paid, must be remitted by the financial corporation on or before the due date of the return; i.e. within 184 days of the financial corporation's taxation year-end.
The legislation imposes a penalty of 10% of the amount of unpaid tax for late-filed returns or for late or deficient tax payments. In addition, interest on any overdue tax amounts will be charged at prescribed rates.
Letters from taxpayers requesting acknowledgement for receipt of the return, or instalments, will not be returned. After the return is assessed, a Notice of Assessment will be issued.
The account number is preprinted on the return that is mailed out by the Branch. If using a generic form or software generated form, enter the account number in the space provided.
If this is the financial corporation's first year of filing a return, or if this is the first return of an amalgamated financial corporation, contact the Branch to obtain the new account number. Complete the return as instructed and attach a copy of the certificate of incorporation or a copy of the amalgamation certificate, as applicable.
Do not use a photocopy of a return that has been preprinted for another corporation or for another taxation year.
Indicate if the financial corporation is filing a Taxpayer Requested Adjustment to the return.
If the name and/or address of the financial corporation differs from the preprinted return, complete the change of address information in the space provided.
The Branch will only mail information to the address on the return.
Enter the start and end date of the financial corporation's taxation year. This should coincide with the financial corporation's taxation year for federal income tax purposes.
Indicate if this is the financial corporation's first year of filing a return; if not, indicate the taxation year end of the last return filed.
First-time filers should indicate the date of incorporation.
If this is the first return of an amalgamated financial corporation, enter the date of amalgamation, complete Schedule I and include a copy of the amalgamation certificate.
Indicate if this is a final return. If yes, state the reason in the space provided.
Indicate if the financial corporation is exempt and provide the reason in accordance with Section 4 of the CCT Act.
Exempt financial corporations include:
Indicate if the financial corporation ceases or begins to have a permanent establishment during the taxation year and complete Schedule I. The permanent establishment criteria are stated on the back of Schedule I.
Indicate if the financial corporation is:
Indicate if the financial corporation is filing Schedule H.
The Branch will not discuss your return nor release information to your representative unless this form is completed.
If the return is prepared using a computer software program, a preprinted return will not be mailed to the taxpayer for the subsequent year. All computer software forms must be approved by the Branch.
Enter the financial corporation's federal business number.
Indicate if the financial corporation is a member of an associated group of financial corporations as defined in Section 256 of the Income Tax Act (Canada).
Associated financial corporations must complete Schedule F and Boxes A and B as indicated.
For more details, see instructions for completing Schedule F.
This section summarizes the financial corporation's capital tax liability and payments for the respective taxation year. If the financial corporation has a short taxation year, the amount of the tax payable is prorated.
The number of days in the taxation year should normally coincide with the number of days in the taxation year for federal income tax purposes.
Enter the number of days in the calendar year: either 365 or 366 in a leap year.
Enter the amount of the prior years' overpayment (if any) which is to be applied to the current year's tax liability.
Enter the balance of tax owing or refundable after subtracting previous payments (Box 1G) from the amount of liability calculated (Box 1D). If there is an amount refundable, enter as a negative.
If there is a balance of tax owing (Box 1H is positive), enter the amount of the cheque attached to the return.
If the cheque has been sent under separate cover or is postdated, enter NIL.
If there is a refund of tax owing (Box 1H is negative), indicate if this amount is to be refunded to the financial corporation or applied to the financial corporation's subsequent taxation year.
If neither box is completed, the overpayment will be refunded.
The certification box must be signed and dated by a duly authorized signing officer of the financial corporation.
The calculation of Net Paid Up Capital is the basis for determining if a financial corporation is subject to tax.
Net Paid Up Capital of a financial corporation is determined by deducting the investment allowance, if applicable (Box 2L), from the total paid up capital (Box 2H).
If claiming an investment allowance, the financial corporation must complete Schedule A.
Authorized foreign banks are to only complete Boxes 2G through 2M (inclusive).
Enter the amount of all classes of share capital as disclosed on the balance sheet.
For the purposes of the Act, the capital stock of a credit union does not include its non-equity shares. Therefore, for credit unions, if the amount in Box 2A includes an amount for non-equity shares, enter the non-equity shares amount in Box 2B.
Enter the amount of retained earnings (or deficit) as disclosed on the financial corporation's non-consolidated financial statements.
If this amount includes earnings or losses from investments reported on the equity basis, the financial corporation must complete Schedule A. Enter the amount from Box 1E of Schedule A (retained earnings) in Box 2D.
Include all amounts reported for purposes of GAAP, to qualify as contributed surplus.
Enter the sum of boxes C to E in Box 2F to arrive at total paid up capital for all financial corporations excluding authorized foreign banks.
This box is to be used by authorized foreign banks only. Authorized foreign banks must first complete Schedule J in order to calculate total paid up capital. Subsequently, enter total paid up capital from Box 2E of Schedule J in Box 2G of the return.
For taxation years starting on or after September 1, 2002, all financial corporations are eligible for the investment allowance. Complete Section 2 of Schedule A to determine total assets. Subsequently, enter the amount from Box 2H (total assets) of Schedule A in Box 2J of the return.
Complete Section 5 of the return to arrive at total investments in Box 2I.
To arrive at the investment allowance deduction (Box 2L), divide Box 2J into Box 2I and multiply the quotient by total paid up capital (Box 2K).
The amount of the investment allowance deduction (Box 2L) cannot exceed the carrying value of the eligible investments (Box 2I).
If the financial corporation is not subject to capital tax, go to Section 1 and complete the return as instructed. If the financial corporation is subject to capital tax, go to Section 3.
BC Paid Up Capital is calculated by multiplying the financial corporation's Net Paid Up Capital (Box 3A) by its allocated percentage to British Columbia.
Complete Schedule E to determine the allocated percentage and enter the amount from Item H of Schedule E in Box 3B of the return.
If the amount in Box 3A (Net Paid Up Capital) is greater than $1 billion, go to Section 4; if not, complete Schedule G. Net Paid Up Capital is the basis for determining a financial corporation's eligibility for the 1% tax rate, which is calculated using Schedule G.
For those financial corporations that have Net Paid Up Capital greater than $1 billion, the tax rate is 3%. Complete Section 4 as instructed. Subsequently, enter the amount from Box 4C in Box 1A of the return and complete the remainder of section 1.
Complete Schedule G if Net Paid Up Capital is less than or equal to $1 billion or if the corporation has head office in British Columbia.
In Box 5A, enter the carrying value of all eligible shares and report this amount in Box 2I of the return.
Eligible investments are shares of another financial corporation with a permanent establishment in British Columbia whose taxation year ends on the same date and that is not exempt under section 4(3) of the Act. Exempt financial corporations include the Credit Union Central of British Columbia, the Stabilization Credit Union of British Columbia and a bankrupt financial corporation from the date of its bankruptcy for as long as it remains bankrupt.
In the case of an authorized foreign bank, the carrying value of eligible investments is the total of all amounts, before the application of risk weights, in respect of the eligible investments held by the bank at the end of its taxation year in respect of its Canadian banking business.
Schedule A must be completed by a financial corporation:
Section 1 adjusts the financial corporation's retained earnings (deficit) disclosed on its balance sheet by excluding earnings or losses from investments that have been included in retained earnings (deficit) under the equity method of accounting.
The financial corporation's equity share of earnings from another corporation must be deducted from the financial corporation's retained earnings (deficit). Similarly, the financial corporation's equity share of losses must be added back to the financial corporation's retained earnings (deficit).
The actual amount of dividends received (receivable) must be added to retained earnings (to adjust from the equity method to the cost method of accounting).
The total assets calculation is required in order to compute the investment allowance deduction. This schedule adjusts the carrying value of the assets reported on the financial corporation's balance sheet.
For authorized foreign banks, the value of total assets is the amount of balance sheet assets before the application of risk weights that would be reported under the risk-weighting guidelines of the Superintendent of Financial Institutions and only includes those assets held by the bank at the end of its taxation year in respect of its Canadian banking business.
Liabilities such as loans or payables that are netted against the carrying value of the assets and are not required to be netted in accordance with GAAP must be added back to calculate total assets.
Deferred credits netted against the carrying value of the assets must be added back to calculate total assets. Deferred credits include such amounts as government assistance and investment tax credits.
If the financial corporation has investments in other corporations, which are reported on the equity basis, it must deduct the equity value of these investments and add back the carrying value of such investments to the financial corporation's total assets.
This schedule must be completed by a financial corporation that operates in more than one jurisdiction.
Banks (including authorized foreign banks) and credit unions must complete the allocation calculation in Part I. Trust companies must complete the allocation calculation in Part 2 (on reverse of the form). The allocation calculations are in accordance with sections 4 and 5 of the CCT regulations (B.C. Reg. 199/2002). Note: B.C. Reg. 199/2002 replaced the former CCT regulation (B.C. Reg. 79/96) on September 1, 2002.
If permanent establishment in British Columbia started or ended during the taxation year, complete Schedule I.
Note: authorized foreign banks must not allocate to jurisdictions outside of Canada.
A financial corporation that is a member of an associated group of financial corporations, as defined in Section 256 of the Income Tax Act (Canada), must complete Schedule F.
Indicate all financial corporations that are members of the associated group, including the reporting financial corporation.
If any financial corporation in the associated group has a permanent establishment in British Columbia, provide the CCT account number and the taxation year end of each financial corporation.
The financial corporation must provide the Net Paid Up Capital and the BC Paid Up Capital of each associated financial corporation. In determining these amounts, use the taxation year for each of the associated financial corporations ending in the same calendar year.
If the BC Paid Up Capital is negative, for any member in the group, do not include the negative amount; instead, enter nil.
If the relevant amounts are not available at the time of filing the CCT return for the reporting financial corporation, provide an estimate based on the prior years' figures. When the actual amounts are known and they would cause a different CCT amount, the reporting financial corporation must file a Taxpayer Requested Adjustment including a revised Schedule F showing the actual amounts.
Schedule G calculates Corporation Capital Tax Payable for financial corporations with Net Paid Up Capital of $1 billion or less, or for financial corporations with head office in British Columbia. The tax rate for these financial corporations is 1%.
Complete Part 1 if the financial corporation is not a member of an associated group of financial corporations; otherwise, complete Part 2.
Enter the amount from Box 3A of the return (Net Paid Up Capital) in Box 1A.
Enter the amount from Box 3C of the return (BC Paid Up Capital) in Box 1B.
Enter the threshold and notch amount in the respective boxes using the following table:
|
Threshold Amount |
Notch | |
|
Ending after December 31, 2000 and |
$ 5,000,000 |
$ 5,250,000 |
|
Ending after March 31, 2003 |
$10,000,000 |
$10,250,000 |
If the amount in Box 1A (Net Paid Up Capital) is less than the threshold amount, capital tax payable is nil: ignore the remaining sections of the schedule and complete Section 1 of the return as instructed.
If the amount in Box 1A (Net Paid Up Capital) is greater than the threshold amount, the financial corporation is taxable and must complete the applicable tax calculation as indicated in the following table:
|
BC PAID UP Capital (BOX B) |
||
|
At Least |
Less than |
|
|
$0 |
$250,000 |
Enter the lesser of $250 and (Box 1B x 0.01) in Box 5A (Part 1) |
|
$250,000 |
$1,500,000 |
Enter $500 in Box 5A (Part 1) |
|
$1,500,000 |
Complete Section 2: Reduced Tax Calculation (Part 1) | |
|
Complete Section 3: Notch Calculation (Part 1) | ||
|
Complete Section 4: Basic Tax Calculation (Part 1) | ||
"Capital" = the financial corporation's BC Paid Up Capital for the taxation year (Box 1B)
Section 2 is applicable to a financial corporation with BC Paid Up Capital between $1,500,000 and the threshold amount. The tax calculation and capital tax payable for the financial corporation is:
[ (Capital - $ 1.5 million) x 1% tax rate ] + $ 500
If this section is applicable, complete the section as instructed. Do not complete Section 3 or 4.
Section 3 is applicable to a financial corporation with BC Paid Up Capital between the threshold and the notch amount. The tax calculation and capital tax payable for the financial corporation is:
[ (Capital x 1% tax rate )] - [(notch - Capital) x 1.6%]
If this section is applicable, complete the section as instructed. Do not complete Section 2 or 4.
Section 4 is applicable to a financial corporation with BC Paid Up Capital greater than or equal to the notch amount. The tax calculation and capital tax payable for the financial corporation is:
[ Capital x 1% tax rate ]
If this section is applicable, complete the section as instructed. Do not complete Section 2 or 3.
Complete this section if a financial corporation is member of an associated group of financial corporations.
Enter the amount from Box 3A of the return (Net Paid Up Capital) in Box 1A.
Enter the amount from Box 3C of the return (BC Paid Up Capital) in Box 1B.
Enter the threshold and notch amounts in the respective boxes. See the threshold and notch table outlined under Part 1.
Enter the Net Paid Up Capital of the associated group of financial corporations as determined on Schedule F.
Enter the BC Paid Up Capital of the associated group of financial corporations as determined on Schedule F.
If the amount in Box 1E (Net Paid Up Capital of associated group) is less than the threshold amount, Capital tax payable is nil; ignore the remaining sections of the schedule and complete Section 1 of the return as instructed.
If the amount in Box 1E (Net Paid Up Capital of associated group) is greater than or equal to the threshold amount, the financial corporation is taxable and must complete the applicable tax calculation as indicated in the following table:
|
BC PAID UP CAPITAL OF ASSOCIATED GROUP (BOX F) |
||
|
At least |
Less than |
|
|
$0 |
$250,000 |
Enter the lesser of $250 and (Box 1F x 0.01) in Box 5A (Part 2) |
|
$250,000 |
$1,500,000 |
Enter $500 in Box 5A (Part 2) |
|
$1,500,000 |
Complete Section 2: Reduced Tax Calculation (Part 2) | |
|
Complete Section 3: Notch Calculation (Part 2) | ||
|
Complete Section 4: Basic Tax Calculation (Part 2) | ||
"Capital" = the financial corporation's BC Paid Up Capital for the taxation year (Box 1B)
"Total capital" = the total of the BC Paid Up Capital for the taxation year for the financial corporation and every financial corporation with which it is associated (Box 1F)
Section 2 is applicable to a financial corporation that is a member of an associated group of financial corporations with group BC Paid Up Capital between $1,500,000 and the threshold amount. The tax calculation is:
[ (Total Capital - $ 1.5 million) x 1% tax rate ] + $ 500
If this section is applicable, complete the section as instructed and then go to section 5. Do not complete Section 3 or 4.
Section 3 is applicable to a financial corporation that is a member of an associated group of financial corporations with group BC Paid Up Capital between the threshold and the notch amount. The tax calculation is:
[Total Capital x 1% tax rate] - [(notch - total capital) x 1.6%]
If this section is applicable, complete the section as instructed and then go to section 5. Do not complete Section 2 or 4.
Section 4 is applicable to a financial corporation that is a member of an associated group of financial corporations with group BC Paid Up Capital greater than or equal to the notch amount. The tax calculation and capital tax payable for the financial corporation is:
[Capital x 1% tax rate]
If this section is applicable, complete the section as instructed. Do not complete Section 2 or 3.
Complete this section as instructed if a tax calculation in section 1, section 2 (reduced tax calculation) or section 3 (notch calculation) was used.
The authorization form must be completed to permit the branch to discuss any issues relating to corporation capital tax with the named representative of the financial corporation. A financial corporation may have more than one authorized representative for a specific taxation year.
If the financial corporation has changed its name since filing its last return, complete Section 1 and submit the certificate of name change.
If this is the final year before an amalgamation or if this is the first year after amalgamating, complete Section 2 and submit the articles of amalgamation. Provide the CCT account number of each predecessor corporation where applicable.
If the financial corporation ceases to have or begins having a "permanent establishment" in BC during the taxation year, complete Section 3. An excerpt of the CCT Act, which explains the concept of a "permanent establishment", is found on the reverse of Schedule I.
This schedule is to be completed by authorized foreign banks only. Authorized foreign banks must use financial statements and the Capital Adequacy Report required to be filed with the Office of the Superintendent of Financial Institutions (OSFI) to complete this schedule.
Authorized foreign banks are foreign banks that have authorization under the federal Bank Act (Canada) to operate through a branch in Canada.
Total risk-weighted assets are the total of all risk-weighted amounts at the end of the year of an on-balance sheet asset or an off-balance sheet exposure of the bank in respect of its Canadian banking business that the bank would be required to report under the risk-weighting guidelines, issued by OSFI, if those guidelines applied and required reporting at that time.
Canadian banking business is defined in the regulations to the Act to mean a business carried on by an authorized foreign bank through a permanent establishment in Canada.
Enter total risk-weighted on-balance sheet assets, derived from the OSFI Capital Adequacy Report, in Box 1A.
Enter total risk-weighted off-balance sheet exposures, derived from the OSFI Capital Adequacy Report, in Box 1B.
Enter the sum of Box 1A (total risk-weighted on-balance sheet assets) and Box 1B (total risk-weighted off-balance sheet exposures) in Box 1C.
Multiply the amount in Box 1C (total risk-weighted assets) by 0.10 and enter the product in Box 1D.
The total paid up capital calculation is the sum of 10% of total risk-weighted assets and the bank's total capital deductions in respect of its Canadian banking business minus the lesser of
(1) subordinated debt, or
(2) the sum of 3% of total risk-weighted assets plus the total of the bank's capital deductions, excluding tier 1 capital deductions.
Enter the amount from Box 1D (10% of total risk-weighted assets) in Box 2A.
Enter the amount from Section 4, Box C (total capital deductions) in Box 2B. See Section 4 - Total Capital Deductions Calculation.
Enter the sum of Box 2A (10% of total risk-weighted assets) and Box 2B (total capital deductions) in Box 2C.
Enter the subordinated indebtedness amount, determined in Box F of Section 3, in Box 2D. See Section 3 - Subordinated Indebtedness Calculation.
Subtract Box 2D (the subordinated indebtedness amount) from Box 2C (the aggregate of 10% of total risk-weighted assets and total capital deductions) and enter the residual in Box 2E and in Box 2G of the return.
The subordinated indebtedness calculation determines the allowable deduction from the aggregate of 10% of total risk-weighted assets and total capital deductions. The allowable deduction is the lesser of the subordinated indebtedness in respect of the bank's Canadian banking business and the aggregate of 3% of total risk-weighted assets and the capital deductions from the sum of tier 1 and tier 2 capital.
Enter the amount from Box 1C (total risk-weighted assets) in Box 3A.
Multiply the amount in Box 3A (total risk-weighted assets) by 0.03 and enter the product in Box 3B.
Enter the amount from Box 4B (capital deductions from the sum of tier 1 and tier 2 capital) in Box 3C.
Enter the sum of Box 3B (3% of total risk-weighted assets) and 3C (capital deductions from the sum of tier 1 and tier 2 capital) in Box 3D.
Enter the subordinated indebtedness in respect of the bank's Canadian banking business in Box 3E.
Enter the lesser of Box 3D (the aggregate of 3% of total risk-weighted assets and capital deductions from the sum of tier 1 and tier 2 capital) and Box 3E (subordinated indebtedness) in Box 3F.
Capital deductions are the amounts in respect of the bank's Canadian banking business that, if the bank were listed in Schedule II to the Bank Act (Canada), would be required to be deducted from the bank's capital under capital adequacy guidelines in order to satisfy OSFI's requirement that capital equal a particular portion of risk-weighted assets and exposures. Capital deductions do not include amounts in respect of loss protection facilities that are required to be deducted from a bank's capital under OSFI Asset Securitization Guidelines.
Capital deductions from tier 1 capital are those amounts in respect of the bank's Canadian banking business that would be required to be deducted from tier 1 capital under the capital adequacy guidelines issued by OSFI if the bank were listed in Schedule II to the Bank Act (Canada).
In the table provided, list capital deductions from tier 1 capital and their respective amounts; add these amounts to arrive at Total Tier 1 Capital Deductions.
Capital deductions from the sum of tier 1 and tier 2 capital are those amounts in respect of the bank's Canadian banking business that would be required to be deducted from the sum of tier 1 and tier 2 capital under the capital adequacy guidelines issued by OSFI if the bank were listed in Schedule II to the Bank Act (Canada). Capital deductions do not include amounts in respect of loss protection facilities that are required to be deducted from a bank's capital under OSFI Asset Securitization Guidelines.
In the table provided, list capital deductions from the sum of tier 1 and tier 2 capital and their respective amounts; add these amounts to arrive at Total Capital Deductions from Sum of Tier 1 and Tier 2 Capital.
Enter total tier 1 Capital deductions in Box 4A.
Enter total Capital deductions from sum of tier 1 and tier 2 capital in Box 4B.
Enter the sum of Box 4A (total tier 1 capital deductions) and Box 4B (capital deductions from the sum of tier 1 and tier 2 capital) in Box 4C.