T1 Guide - Total income

The Canada Revenue Agency says...

General Income Tax and Benefit Guide

You have to include in income most amounts you received in 2010.

Amounts that are not taxed

Amounts that are not taxed

You do not have to include certain amounts in your income, including the following:
  • any GST/HST credit or Canada Child Tax Benefit payments, as well as those from related provincial or territorial programs;
  • child assistance payments and the supplement for handicapped children paid by the province of Québec;
  • compensation received from a province or territory if you were a victim of a criminal act or a motor vehicle accident;
  • lottery winnings;
  • most gifts and inheritances;
  • amounts paid by Canada or an ally (if the amount is not taxable in that country) for disability or death due to war service;
  • most amounts received from a life insurance policy following someone's death; and
  • most payments of the type commonly referred to as strike pay you received from your union, even if you perform picketing duties as a requirement of membership; and
Note: Income earned on any of the above amounts (such as interest you earn when you invest lottery winnings) is taxable.

  • most amounts received from a Tax-Free Savings Account (TFSA). For more information, go to http://www.cra.gc.ca/tfsa or see Guide RC4466, Tax-Free Saving Account (TFSA).

Retroactive lump-sum payments

Retroactive lump-sum payments

If you received a lump-sum payment of eligible income in 2010, parts of which were for years after 1977, you have to include the whole payment on the appropriate line of your return for 2010.

We will not reassess the returns for the previous years to include this income. However, you can ask us to tax the parts for the previous years as if you received them in those years. We can apply this calculation to the parts that relate to years throughout which you were resident in Canada, if the total of those parts is $3,000 or more (not including interest) and the result is better for you.

Eligible income includes:
  • employment income and damages for loss of employment received by order or judgment of a competent tribunal, as an arbitration award, or under a lawsuit settlement agreement;
  • periodic pension benefits, which do not include Canada Pension Plan or Québec Pension Plan benefits (see line 114);
  • wage-loss replacement plan benefits;
  • support payments for a spouse, common-law partner, or child; and
  • Employment or Unemployment Insurance benefits.

To ask the CRA to apply this calculation, attach to your paper return all completed copies of Form T1198, Statement of Qualifying Retroactive Lump-Sum Payment, that payers have given you. We will tell you the results on your Notice of Assessment or Notice of Reassessment.

Loans and transfers of property

Loans and transfers of property

You may have to report income, such as dividends (see line 120) or interest (see line 121) from property (including money and any replacement property) you loaned or transferred to your spouse or common-law partner, child, or other relative. You also may have to report capital gains (see line 127) or losses from property you loaned or transferred to your spouse or common-law partner.

For more information, see interpretation bulletins IT-510, Transfers and Loans of Property Made After May 22, 1985, to a Related Minor, and IT-511, Interspousal and Certain Other Transfers and Loans of Property.

Split income of a child under 18

Split income of a child under 18

Certain income of a child who was born in 1993or later is treated differently. This income is not subject to the rules discussed in "Loans and transfers of property" in Total income. It is subject to a special tax, but also qualifies for a deduction. This applies to the following amounts received either directly or through a trust (other than a mutual fund trust) or partnership:
  • dividends from shares (not including those in a mutual fund corporation or listed on a designated stock exchange); and
  • shareholder benefits that relate to shares that are not listed on a designated stock exchange.
The above also applies to income from a trust (other than a mutual fund trust) or partnership for providing property or services to (or in support of) a business operated by:
  • someone related to the child at any time in the year;
  • a corporation that has a specified shareholder who is related to the child at any time in the year; or
  • a professional corporation that has a shareholder who is related to the child at any time in the year.
The special tax and deduction do not apply if:
  • the income is from property that the child inherits from a parent;
  • the income is from property inherited by the child from anyone else and, during the year, he or she is either enrolled full-time in a post-secondary institution or qualifies for the disability amount (line 316 on Schedule 1);
  • the child was a non-resident of Canada at any time in the year; or
  • neither of the child's parents were residents of Canada at any time in the year.

How to report

How to report

The child still reports the income on the appropriate lines of his or her return. However, he or she can claim a deduction on line 232 for this income. The special tax is included in the calculation of his or her federal and provincial or territorial taxes.

If this tax applies, calculate it on Form T1206, Tax on Split Income, and enter the amount from line 5 on line 424 on Schedule 1. Attach a completed copy to the child's paper return.

Tax shelters

Tax shelters

To claim deductions, losses, or credits from tax shelter investments, attach to your paper return any applicable T5003 slips and a completed Form T5004, Claim for Tax Shelter Loss or Deduction. Also, if applicable, attach any T5013A slips. Your form must show the tax shelter identification number.