T2203 – Multiple Jurisdictions

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 the 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 2019 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 and territorial tax rates are applied to the taxable income from all sources. Non-refundable tax credits and some other tax credits are allowable (with certain restrictions relating to residency) in calculating a basic provincial and 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 and territorial taxes for 2019.