Troubleshooting – Schedule 7, Aggregate Investment Income and Income Eligible for the Small Business Deduction – In the first tax year starting after 2018, the amounts carried forward to lines 2A and 2B may be incorrect

  • Article Type: Problem Resolution
  • Last Modified: 2019-10-28

Symptoms

When carrying forward a file that has been saved in a version prior to Cantax T2 19.1.3xx.100 (hereinafter original file), amounts may be carried forward to:
  • line 2A, Eligible portion of taxable capital gains for each tax year that ended in the preceding calendar year (other than taxable capital gains from the disposition of an active asset) and;
  • line 2B, Eligible portion of allowable capital losses for each tax year that ended in the preceding calendar year (including allowable business investment losses)(other than allowable capital losses from the disposition of an active asset) 
under the title If this is your first tax year starting after 2018, complete the following portion in Part 2 of Schedule 7. However, these two lines should be empty. 

Note that this problem may also affect the values carried forward to lines 2A and 2B of a file saved with Cantax T2 19.1.3xx.100 or Cantax T2 19.1.3xx.106 in which the amounts on lines 705 and 710 of Schedule 7 are equal to 0.
 

Environment

Cantax T2 19.1.3xx.100
Cantax T2 19.1.3xx.106
 

Cause

When the corporation is a CCPC whose tax year indicated in the original file starts before January 1, 2019, and whose tax year in the carried forward file starts after December 31, 2018, the program will carry forward the following amounts from the original file:
  • If there is a positive amount on the line Totals in either one of the Expired or Carry forward columns of the table Part 7 – Carry forwards of charitable donations (in tab S2-5) in Schedule 2, Charitable Donations and Gifts (S2), the total of these two amounts will be carried forward to line 2A.
  • If there is a positive amount on line 370 in Part 3 of Schedule 506, Ontario Transitional Tax Debits and Credits (S506), this amount will be carried forward to line 2B.

As a result, the following two diagnostics may also appear when lines 002 and 012 in Part 1 of Schedule 7 equaled 0 in the original file:

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Original file data:
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Resulting carry forward file

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Resolution

If lines 705 and 002 equaled 0 in the original file, enter 0 manually on line 2A. Similarly, if lines 710 and 012 equaled 0 in the original file, enter 0 manually on line 2B.  

If a positive amount was entered on line 002 and/or 012, one or both of the aforementioned diagnostics displays and the amount on line 2A or 2B does not correspond to the eligible portion of taxable capital gains or allowable capital losses arising from the disposition of an asset other than an active asset for a tax year ending in the preceding calendar year, enter the appropriate amount manually on line 2A or 2B.
 

Additional Information

This problem will be corrected in Cantax T2 19.2.3xx.126.
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