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.
Use this form to calculate your provincial and territorial taxes if one of the following situations applies:
- You resided in a province or territory of Canada at the end of the year (or the date you left Canada if you emigrated) and all or part of your business income (including income you received as a retired, inactive, or limited partner) for the year was earned and can be allocated to a permanent establishment outside of that province or territory, or outside Canada
- You were a non-resident of Canada throughout the year carrying on business in more than one province or territory in Canada, receiving income from an office or employment that can reasonably be attributed to duties performed in more than one province or territory in Canada, or you had both types of income from two different provinces or territories
If either of these situations applies to you, you have to determine the part of your total provincial or territorial tax that is payable to the jurisdiction where you reside and the part that is payable to other jurisdictions in Canada.
If you use Form T2203 to calculate your provincial and territorial tax, do not complete Form 428 for any province or territory.
If you have to pay minimum tax attach your completed Form T691, Alternative Minimum Tax, to your return. If you have split income, ensure that you have completed Form T1206, Tax on Split Income, to determine the tax on split income amounts to enter for each province and territory.
Tax and multiple jurisdictions
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.
When tax is payable to multiple jurisdictions, provincial and territorial tax rates are applied to the taxable income from all sources. Nonrefundable 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.
Which parts of Form T2203 do I need to complete?
Form T2203 contains modified versions of Form 428 as well as the worksheets and schedules needed to calculate your provincial and territorial taxes for your province or territory of residence and for all jurisdictions where business income was earned.
Complete and attach to your tax return only the parts of this form that apply to you.
Part 1 – Allocating income to multiple jurisdictions
Complete this part to allocate your income to the appropriate jurisdictions and determine the percentage of income that is allocated to each jurisdiction.
Part 2 – Federal surtax on income you earned outside Canada and refundable Quebec abatement
Complete this part if you have income allocated "Outside Canada" (line 52220 in Part 1) or to Quebec (line 52140 in Part 1).
Part 3 – Provincial and territorial non-refundable tax credits
Complete this part for each province and territory (except Quebec) that you have income allocated to.
Part 4 – Provincial or territorial tax (multiple jurisdictions)
Complete this part for each province and territory (except Quebec) that you have income allocated to. This part includes Form 428MJ, Worksheet 428MJ, Schedules (S2)MJ, (S11)MJ and 428-A MJ (Ontario and Manitoba only).
Part 5 – Provincial and territorial tax summary
Complete this part to summarize your total provincial and territorial taxes (except Quebec).
Many tax credits are limited to the amount of tax payable to the province or territory. When you are asked to enter the provincial or territorial tax amount from line 42800 of your return or from a provincial or territorial Form 428, enter the applicable amount from the provincial or territorial tax summary in Part 5 of your Form T2203.
Provincial and territorial credits not included on Form T2203
You may be eligible for other tax credits and benefits not included on Form T2203. Complete Form 479 for your province or territory of residence and its related forms. In addition to the refundable tax credits that you may be eligible to claim for your province or territory of residence, the chart on the next page lists the forms you need to claim the additional provincial and territorial credits you may be entitled to as a non-resident.
Add these credits to the credits you are claiming for your province or territory of residence and include the total on line 47900 of your return and attach all the completed forms to your return.
To get the following forms, go to canada.ca/cra-forms or call the Canada Revenue Agency at 1-800-959-8281. For more information on the provincial and territorial tax information, go to canada.ca/prov-terr-tax-information.
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Newfoundland and Labrador |
Form NL479, Newfoundland and Labrador Credits:
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Ontario |
Form ON479, Ontario Credits:
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Manitoba |
Form MB479, Manitoba Credits:
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British Columbia |
Form BC479, British Columbia Credits:
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Yukon |
Form YT479, Yukon Credits:
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Nunavut |
Form NU479, Nunavut Credits:
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