Line 648 relates to the Federal Qualifying Environmental Trust (QET) Tax Credit. This credit is available to corporations that are beneficiaries under a qualifying environmental trust, and it is equal to the Part XII.4 tax payable by the trust on its income.
Key Points:
- Qualifying Environmental Trust (QET):
- A QET is a trust meeting specific criteria, including having trustees that are either the federal or provincial Crown or a corporation resident in Canada licensed or authorized to provide trustee services.
- The trust's primary purpose is to fund the reclamation of a site in Canada that has been used primarily for activities like mining, extraction, waste deposition, or, if created after 2011, the operation of a pipeline.
- Maintenance Requirements:
- The trust must be maintained under federal or provincial law, the terms of a contract with the Crown, or, if established after 2011, an order of a tribunal constituted under federal or provincial law.
- Exclusion Criteria:
- The trust should not fall under the definition of an excluded trust as outlined in subsection 211.6(1) of the Income Tax Act.
- Tax Rate:
- The rate of tax payable by a QET is currently 15%.
- Credit Claim:
- On Line 648, corporations can enter the credit claim, which is limited to the amount of Part I tax otherwise payable.
- Unused Amount:
- Any unused amount of the credit can be entered on Line 792 (page 9).
Reference:
- Section 127.41 of the tax code provides the legal basis for the Federal Qualifying Environmental Trust (QET) Tax Credit.
Example Scenario:
Suppose Corporation X is a beneficiary under a qualifying environmental trust established to fund the reclamation of a mining site. The trust meets all the specified criteria, and the tax payable by the trust is calculated at 15%. Corporation X can claim a tax credit on Line 648, up to the amount of Part I tax otherwise payable, with any unused amount entered on Line 792.
