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What is Minimum Tax?

Minimum tax limits the tax advantage you can receive in a year from certain incentives. You have to pay minimum tax if it is more than the federal tax you calculate in the usual manner.

Most common situations where you may have to pay Minimum Tax

A. You reported a taxable capital gain

B. You claimed any of the following on your return:

  • a loss resulting from claiming capital cost allowance on rental properties

  • a loss from a limited partnership that is a tax shelter

  • most carrying charges on certain investments

  • a loss from resource properties resulting from claiming a depletion allowance, exploration expenses, development expenses, or Canadian oil and gas property expenses

  • a deduction for security options

C. You claimed any of the following tax credits on your return:

  • a federal political contribution tax credit

  • an investment tax credit

  • a labour-sponsored funds tax credit

  • a federal dividend tax credit

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