Form T2 Schedule 27 "Calculation of Canadian Manufacturing and Processing Profits Deduction (2019 and Later Tax Years)" - Canada

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Download Form T2 Schedule 27 "Calculation of Canadian Manufacturing and Processing Profits Deduction (2019 and Later Tax Years)" - Canada

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Clear Data
Schedule 27
Code 1901
Protected B
when completed
Calculation of Canadian Manufacturing and Processing Profits Deduction
(2019 and later tax years)
Tax year-end
Corporation's name
Business number
Year
Month
Day
• Small manufacturing corporations that meet requirements 1 through 4 in Part 1 of this schedule should complete Part 1. Corporations that only generate
electrical energy for sale or produce steam for sale must complete Part 10 on page 5. All other corporations should complete Part 2.
• All legislative references are to the Income Tax Act and the Income Tax Regulations.
• Income that is eligible for the small business deduction is not eligible for the manufacturing and processing profits deduction.
• See page 7 for notes and definitions to help you complete this schedule.
Part 1 – Small manufacturing corporations
See
notes 1 to 7
on page 7.
To qualify as a small manufacturer, you have to meet all of the following requirements:
1. your activities during the year were mainly manufacturing or processing in Canada of goods for sale or lease;
2. the following calculation totals $200,000 or less:
your active business income minus active business losses for the year [this includes your share of active
business income and active business loss for the fiscal period of each partnership of which you were a member
100
at any time in the year (see i) below)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
the active business income for the tax year of each Canadian corporation with which you were associated in
105
the year (see ii) below) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total (line 100 plus line 105) (cannot exceed $200,000 under section 5201 of the regulations)
110
3. you were not engaged at any time during the year in any activities as set out in subsections 5201 (c) to (c.3) of the regulations; and
4. you did not carry on any active business outside Canada at any time during the year.
If you meet requirements 1 through 4, your Canadian manufacturing and processing profits are equal to line 100 above.
Enter this amount on line 200 in Part 9.
If you do not meet requirements 1 through 4, complete Part 2 below.
Partnerships and associated corporations
If it applies, please give the following information on a separate sheet of paper attached to this form:
i) Partnerships – give the name, business number, and total income or loss from each active business carried on by each partnership of which you were
a member at any time in the year.
ii) Associated corporations – give the name, business number, and total income from each active business for the tax year carried on by each Canadian
corporation with which you were associated in the year.
Part 2 – Corporations that do not qualify as small manufacturers
Complete this part using all eligible activities other than generating electrical energy for sale or producing steam for sale.
See
note 6
on page 7.
Canadian manufacturing and processing profits (MP)
ADJUBI
× [
+
]
=
(Part 3, line 130)
MC (Part 5, line 150)
ML (Part 7, line 170)
MP
[
+
]
C (Part 4, line 140)
L (Part 6, line 160)
Enter amount MP on line 200 in Part 9.
Page 1 of 7
T2 SCH 27 E (19)
(Ce formulaire est disponible en français.)
Clear Data
Schedule 27
Code 1901
Protected B
when completed
Calculation of Canadian Manufacturing and Processing Profits Deduction
(2019 and later tax years)
Tax year-end
Corporation's name
Business number
Year
Month
Day
• Small manufacturing corporations that meet requirements 1 through 4 in Part 1 of this schedule should complete Part 1. Corporations that only generate
electrical energy for sale or produce steam for sale must complete Part 10 on page 5. All other corporations should complete Part 2.
• All legislative references are to the Income Tax Act and the Income Tax Regulations.
• Income that is eligible for the small business deduction is not eligible for the manufacturing and processing profits deduction.
• See page 7 for notes and definitions to help you complete this schedule.
Part 1 – Small manufacturing corporations
See
notes 1 to 7
on page 7.
To qualify as a small manufacturer, you have to meet all of the following requirements:
1. your activities during the year were mainly manufacturing or processing in Canada of goods for sale or lease;
2. the following calculation totals $200,000 or less:
your active business income minus active business losses for the year [this includes your share of active
business income and active business loss for the fiscal period of each partnership of which you were a member
100
at any time in the year (see i) below)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
the active business income for the tax year of each Canadian corporation with which you were associated in
105
the year (see ii) below) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total (line 100 plus line 105) (cannot exceed $200,000 under section 5201 of the regulations)
110
3. you were not engaged at any time during the year in any activities as set out in subsections 5201 (c) to (c.3) of the regulations; and
4. you did not carry on any active business outside Canada at any time during the year.
If you meet requirements 1 through 4, your Canadian manufacturing and processing profits are equal to line 100 above.
Enter this amount on line 200 in Part 9.
If you do not meet requirements 1 through 4, complete Part 2 below.
Partnerships and associated corporations
If it applies, please give the following information on a separate sheet of paper attached to this form:
i) Partnerships – give the name, business number, and total income or loss from each active business carried on by each partnership of which you were
a member at any time in the year.
ii) Associated corporations – give the name, business number, and total income from each active business for the tax year carried on by each Canadian
corporation with which you were associated in the year.
Part 2 – Corporations that do not qualify as small manufacturers
Complete this part using all eligible activities other than generating electrical energy for sale or producing steam for sale.
See
note 6
on page 7.
Canadian manufacturing and processing profits (MP)
ADJUBI
× [
+
]
=
(Part 3, line 130)
MC (Part 5, line 150)
ML (Part 7, line 170)
MP
[
+
]
C (Part 4, line 140)
L (Part 6, line 160)
Enter amount MP on line 200 in Part 9.
Page 1 of 7
T2 SCH 27 E (19)
(Ce formulaire est disponible en français.)
Clear Data
Protected B when completed
Part 3 – Adjusted business income (ADJUBI)
See
notes 1, 3, and 5
on page 7.
Your active business income minus active business losses for the year [this includes your share of active business income
and active business loss for the fiscal period of each partnership of which you were a member
120
at any time in the year (see i) in Part 1)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3A
Net resource income (amount 8G from Part 8) . . . . . . . . . . . . . . . . . . .
Net resource adjustment per subsection 5203(3.1) of the regulations
3B
3C
Excess (amount 3A minus amount 3B, if negative, enter "0") . . . . . . .
3D
Refund interest under subsection 5203(4) of the regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125
Subtotal (amount 3C plus amount 3D)
130
Adjusted business income (ADJUBI) (line 120 minus line 125, if negative, enter "0") . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter this amount in Part 2, and Part 10 if applicable.
Part 4 – Cost of capital (C)
See
notes 3, 5, 8, and 12
on page 7.
Gross cost of the following property that you owned at the end of the year and used at any time during the year:
depreciable assets eligible for capital cost allowance under Schedule II of
4A
the regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4B
timber limits and cutting rights (other than a timber resource property) . . . . . . . . . . . . . . . .
4C
immovable wood assets (Class 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4D
industrial mineral mines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4E
capital expenditures for scientific research and experimental development . . . . . . . . . . . . .
4F
Part XVII property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
×
Subtotal (total of amounts 4A to 4F)
10%
4G
Rental cost for the use of property, which would be included in 4A to 4F if it were owned by
4H
you at the end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Your share of the amounts that would be determined under amounts 4G and 4H for a partnership of
4I
which you were a member at any time in the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
140
Cost of capital (C) (add amounts 4G, 4H, and 4I) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter this amount in parts 2 and 5, and parts 10 and 11 if applicable.
Part 5 – Cost of manufacturing and processing capital (MC)
See
notes 3, 5, and 12
on page 7.
5A
Cost of capital from line 140, Part 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The part of amount 5A that reflects the extent to which each property was used directly in qualified activities of the
corporation during the year or in qualified activities of a partnership for the fiscal period of a partnership of which
5B
you were a member at any time in the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of manufacturing and processing capital (MC)
150
(amount 5B multiplied by 100 divided by 85, cannot be more than amount 5A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter this amount in Part 2.
Page 2 of 7
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Protected B when completed
Part 6 – Cost of labour (L)
See
notes 3, 5, 9, 10, and 12
on page 7.
6A
Salaries and wages paid or payable to all employees for services performed during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Salaries and wages included in amount 6A that were:
included in the gross cost of property (Part 4) other than property manufactured and leased
6B
during the year to other persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6C
related to an active business carried on outside Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
related to activities engaged in for the purpose of earning Canadian resource profits under
6D
section 5202 of the regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6E
included in your Canadian or foreign exploration and development expenses . . . . . . . . . . . . . . . .
Subtotal (total of amounts 6B to 6E)
6F
6G
Subtotal (amount 6A minus amount 6F)
Salaries and wages referred to in amount 6A, minus the deductions in amount 6F for the fiscal period of a partnership of which you
6H
were a member at any time in the year – corporation's share (attach calculation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal – salaries and wages (amount 6G plus amount 6H)
6I
Amounts paid or payable during the year to non-employees for performing functions relating to:
6J
management and administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6K
scientific research and experimental development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6L
any service or function normally performed by employees of the corporation . . . . . . . . . . . . . . . . .
6M
Subtotal (total of amounts 6J to 6L)
Amounts included in amount 6M that were:
included in the gross cost of property (Part 4) other than property manufactured and leased
6N
during the year to other persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6O
related to an active business carried on outside Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
related to activities engaged in for the purpose of earning Canadian resource profits under
6P
section 5202 of the regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6Q
included in your Canadian or foreign exploration and development expenses . . . . . . . . . . . . . . . .
Subtotal (total of amounts 6N to 6Q)
6R
6S
Subtotal (amount 6M minus amount 6R)
Amounts referred to in amount 6M, minus the deductions in amount 6R for the fiscal period of a partnership of which you were a
6T
member at any time in the year – corporation's share (attach calculation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6U
Subtotal – other payments (amount 6S plus amount 6T)
160
Cost of labour (L) (amount 6I plus amount 6U) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter this amount in Part 2, and Part 10 if applicable.
Part 7 – Cost of manufacturing and processing labour (ML)
See
notes 3, 5, and 12
on page 7.
Part of salaries and wages (included in amount 6I) that was paid or payable to employees for services directly engaged in qualified
7A
activities of the corporation during the year, or of the partnership during its fiscal period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part of other payments (included in amount 6U) that was paid or payable to non-employees for performing functions that would be
directly related to qualified activities of the corporation during the year or of the partnership during its fiscal period, if they had been
7B
employees of the corporation or partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7C
Total (amount 7A plus amount 7B)
Cost of manufacturing and processing labour (ML)
170
(amount 7C multiplied by 100 divided by 75, cannot be more than line 160, Part 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter this amount in Part 2.
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Part 8 – Net resource income
For corporations with resource activities
See
notes 5, 11, and 12
on page 7.
Resource profits under section 1204 of the regulations for the year, including your share of resource profits as a member of a
8A
partnership under subsection 1206(3) of the regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts included in income under section 59 (other than amounts that were included in calculating resource profits), including your
8B
share of such amounts as a member of a partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8C
Subtotal (amount 8A plus amount 8B)
Amounts deducted under section 65 (other than amounts that were deducted in calculating
8D
resource profits) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8E
Income from the processing of foreign ore (see
note 11
on page 7) . . . . . . . . . . . . . . . . . . . . . . . . . .
8F
Subtotal (amount 8D plus amount 8E)
8G
Net resource income (amount 8C minus amount 8F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter this at amount 3A.
Part 9 – Manufacturing and processing profits deduction
For eligible corporations that have such profits
200
Canadian manufacturing and processing profits from Part 1 or Part 2, as applicable . . . . . . . .
9A
Line 400, 405, 410, and 427 or 428 of the T2 return, whichever is the least
(Footnote 1)
. . . . . . . . . .
9B
Subtotal (line 200 minus amount 9A)
9C
Taxable income from line 360 of the T2 return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9D
Line 400, 405, 410, and 427 or 428 of the T2 return, whichever is the least
(Footnote 1)
. . . . . . . .
9E
Aggregate investment income from line 440 of the T2 return
(Footnote 1)
. . . . . . . . . . . . . . . . . . .
Foreign business income tax credit deductible from
×
=
4
(Footnote 3)
9F
line 636
(Footnote 2)
of the T2 return . . . . . . . . . . .
9G
Subtotal (total of amounts 9D to 9F)
9H
Subtotal (amount 9C minus amount 9G)
×
=
13%
9I
Lesser of amount 9B and amount 9H . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount 13L if you are also claiming a deduction for generating electrical energy for sale or
9J
producing steam for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9K
Manufacturing and processing profits deduction (amount 9I plus amount 9J) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter this amount on line 616 of the T2 return.
Footnote 1: Applies only if you are a Canadian-controlled private corporation throughout your tax year. If your tax year begins before 2019, use line 427.
If your tax year begins after 2018, use line 428.
Footnote 2: Calculate the amount of foreign business income tax credit without reference to the corporate tax reductions under section 123.4.
Footnote 3: General tax reduction for the year being 13% since January 1, 2012, the equation 1/(0.38 – X) becomes: 1/(0.38 – 0.13) = 1/(0.25) = 4.
Page 4 of 7
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Corporations that generate electrical energy for sale or produce steam for sale
• A corporation that only generates electrical energy for sale, or produces steam for sale, will need to complete Part 10. If the corporation has other eligible
activities besides generating electrical energy or producing steam, it will need to complete Part 2 and Part 10.
• Complete Part 10 using all manufacturing and processing profits, including generating electrical energy for sale or producing steam for sale.
• Complete Part 2 using all eligible activities other than generating electrical energy for sale or producing steam for sale.
Part 10 – Corporations that generate electrical energy for sale or produce steam for sale
Canadian manufacturing and processing profits (MPA)
ADJUBI
(Part 3,
× [
]
MPA
MCA (Part 11, line 205)
+
MLA (Part 12, line 206)
=
line 130)
[
]
C (Part 4, line 140)
L (Part 6, line 160)
+
Enter amount MPA on line 210 in Part 13.
Part 11 – Cost of all manufacturing and processing capital (MCA)
Include capital used directly in generating electrical energy for sale or producing steam for sale.
See
notes 3, 5, and 12
on page 7.
11A
Cost of capital from line 140, Part 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The part of amount 11A that reflects the extent to which each property was used directly in qualified activities of the
corporation during the year or qualified activities of a partnership during its fiscal period of which you were
11B
a member at any time in the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of manufacturing and processing capital (MCA)
205
(amount 11B multiplied by 100 divided by 85, cannot be more than amount 11A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter this amount in Part 10.
Part 12 – Cost of all manufacturing and processing labour (MLA)
Include labour used directly in generating electrical energy for sale or producing steam for sale.
See
notes 3, 5, and 12
on page 7.
Part of salaries and wages (included in amount 6I) that was paid or payable to employees for services directly engaged in qualified
12A
activities of the corporation during the year, or of the partnership during its fiscal period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part of other payments (included in amount 6U) that was paid or payable to non-employees for performing functions that would be
directly related to qualified activities of the corporation during the year or of the partnership during its fiscal period, if they had been
12B
employees of the corporation or partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total (amount 12A plus amount 12B)
12C
Cost of manufacturing and processing labour (MLA)
206
(amount 12C multiplied by 100 divided by 75, cannot be more than line 160, Part 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter this amount in Part 10.
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