Guide - how to complete the IBA tax refund of a corporation (FIN 546 and FIN 578)

This guide is to help you complete sections of the form that require additional detailed instructions. The information for each section is applicable to either IBA Tax Refund of an International Patent Business (FIN 546) (PDF, 280KB) or IBA Tax Refund of a Corporation (FIN 578) (PDF, 280KB), unless otherwise indicated.

General information

To obtain a tax refund, a registered corporation must file a complete IBA Return with the Ministry of Finance (ministry) within 18 months after the end of the tax year. 

The return will be considered complete only if all of the questions on the IBA Return are answered and all applicable supporting documentation is provided. Retain all documents that support how the amounts reported were derived. 

A refund will only be paid to a registered corporation after all B.C. and federal income taxes for the tax year are paid. To be eligible for a refund under the IBA program, all income taxes payable for the tax year must be paid within 3 years after the end of the tax year. A registered corporation is required to provide proof that all income taxes have been paid before a refund will be issued. 

If the corporation’s registration has been suspended during the tax year, the corporation will receive a Notice of Suspension from the ministry indicating the start date and end date of the suspension. The corporation cannot claim a tax refund for that part of the tax year that its registration was suspended. 

If the corporation’s registration has been cancelled during the tax year, it cannot claim a tax refund for the tax year.

Functional currency

Where a corporation has elected to file in a qualifying currency (functional currency) other than Canadian currency under section 261 of the Income Tax Act (Canada), all amounts in sections 10 to 12 of the IBA return should be stated in that functional currency. The Statement of Adjusted IB Income - Option A (FIN 575) (PDF, 70KB) or Option B (FIN 576) (PDF, 80KB) should be filed in the same functional currency as reported in the IBA Return.

All amounts reported in section 13 (Calculation of Tax Refund) of the IBA return must be in Canadian dollars.

Section 1. Identification

If First Year, Provide Date of IBA Registration – enter the date of registration found on the corporation’s Notice of Registration.

Mailing Address, Location of Books and Records, and Location of Fixed Place of International Business - enter the current mailing address, and if appropriate the address of the location of the books and records, and the location of the fixed place of international business. The location of the books and records for the international business may not be located outside B.C. without the consent of B.C.’s Commissioner of Income Tax. 

Consent may be obtained by mailing a request in writing to:
Commissioner of Income Tax
PO Box 9444 Stn Prov Govt
Victoria BC  V8W 9W8

If the international business has more than one fixed place of business in B.C., please provide a list of locations. Fixed place of business has the same meaning as in the definition of permanent establishment in section 400(2) of the Income Tax Regulations (Canada).

Section 2. Contact Information

This is the person in the corporation who is responsible for the IBA program. If a person outside of the corporation is assigned as the business contact, for example a lawyer or accountant, complete and submit an Authorization or Cancellation of a Representative (FIN 146) (PDF, 260KB). This form allows us to release information to them.

Section 3. Is This the First Year of Filing After Incorporation or Amalgamation?

If YES, attach a copy of T2SCH24, First Time Filer after Incorporation, Amalgamation, or Winding-up of a Subsidiary into a Parent, filed with the Corporation Income Tax Return (T2). 

Section 4. Is This the Final Tax Year Before Amalgamation?

If YES, the continuing corporation must notify the ministry in order to maintain eligibility for the IBA program. See the Guide – how to complete the application for registration of a corporation (FIN 574) for more information. 

Section 5. Is This Your Final IBA Return?

This may be the final IBA return as a result of an amalgamation, windup, dissolution or other reason. Please indicate the reason why this is the final IBA return and provide all necessary, supporting documents.

For example, if the final return is due to dissolution or an amalgamation, include any associated articles or applications to the government body that governs the affairs of the corporation to document the change in the corporation's legal structure. 

Please ensure that the existing corporation has received all IBA tax refunds. Refunds cannot be issued to the corporation or its representatives once the corporation ceases to exist. 

Section 6. Is the Corporation a Resident of Canada?

Section 7. Is the Corporation Exempt From Tax Under Section 27 of the Income Tax Act?

The corporation is not eligible to claim a tax refund if the corporation is exempt from tax under section 27 of the Income Tax Act (B.C.). This includes any corporation exempt from tax by virtue of section 149(1) of the Income Tax Act (Canada) (federal Act) and non-resident owned investment corporations. 

Section 8. Is This An Amended IBA Return?

If YES, attach the reasons for the amendment. This includes a reassessment from the Canada Revenue Agency (CRA), changes to taxable income as a result of losses being carried forward or back, or anything else that changes the calculation of the tax refund. 

The following documents must be provided with the amended form:

• a note explaining the amendment and providing reasons for the amendment;
• a copy of the revised financial statements, if applicable; 
• a copy of the amended T2 return including T2SCH427, British Columbia Corporation Tax Calculation, filed with the CRA, if applicable, and 
• a copy of the applicable Notice of Assessment or Reassessment from the CRA. 

Box 8A – The corporation must notify the ministry within 90 days after the issuance of a Notice of Assessment or Reassessment issued by the CRA under the federal Act or the Income Tax Act (B.C.) when the assessment or reassessment changes an amount relevant to calculating the corporation's tax refund for a tax year.

If the corporation fails to notify the ministry on time, it may be liable for a penalty. If the assessment or reassessment results in an increased refund, the corporation may be liable for a penalty of up to $2,500. If the assessment or reassessment results in a decreased refund, the corporation may be liable for a penalty equal to 25% of the difference.

Box 8B and 8C – If payment is enclosed enter the amount and make the cheque payable to the Minister of Finance.

FIN 578 - Section 9. Type of International Business

Indicate the type of international business carried on by the corporation during the year:

• International Financial Business
• International Film Distribution Business
• International Digital Media Distribution Business (will be defined at a later date)

FIN 546 - Section 9. Type of Patent

Indicate the type of patents owned or licensed by the business:

• Life Science
• Clean Power Generation
• Waste Water Treatment
• Fuel Cell Technology

Section 10. Calculation of Adjusted Income

This section calculates the adjusted income for the corporation. Adjusted income is generally the corporation's net income calculated for tax purposes (Boxes 10A and 10B), adjusted to remove certain losses and dividends (Boxes 10C to 10E). 

Adjusted income is used in the calculation of a corporation's eligible proportion of income under section 12.

Box 10D (net capital losses of subsequent tax years) - enter the amount of net capital losses of subsequent years that have been carried back and applied to reduce current year taxable capital gains that were included in net income at Box 10A. To determine the net amount, apply the appropriate inclusion rate to the capital loss amount that was requested to be carried back from T2SCH4, Corporation Loss Continuity and Application, for the subsequent year.

For further information on capital gains and losses and the appropriate inclusion rate, please see the CRA's publication T4037, Capital Gains.

Box 10G (adjusted Income) - enter the total of Box 10A plus Box 10B less Box 10F. This amount goes to Box 12A. If the total is negative, enter 0 (zero). If this amount is zero, the corporation is not eligible to claim a tax refund for the tax year. 

Section 11. Calculation of B.C. Percentage of Federal Taxable Income

This section calculates the percentage of the corporation's federal taxable income that is allocated to B.C. Where a corporation has a permanent establishment outside of B.C., the percentage would be the same percentage allocated to B.C. as on the T2SCH5, Tax Calculation Supplementary - Corporations.

The percentage of federal taxable income that is allocated to B.C. is used in the calculation of a corporation's eligible proportion of income in section 12 of the form.

Box 11B (federal taxable income) - enter the amount shown on Line 360 of the T2. If the corporation is exempt from income tax under paragraph 149(1)(t) of the federal Act, enter the net amount from Line Z (Line 360 minus Line 370) of the T2.

Box 11C (B.C. percentage of federal taxable income) - divide Box 11A by Box 11B. Enter the percentage calculated to 6 decimal places in Box 11C. This amount goes to Box 12B.

Section 12. Calculation of Eligible Proportion of Income

This section calculates the corporation's eligible proportion of income attributable to the international business for the tax year. This proportion is used in the tax refund calculation in section 13. 

Please note:

• The eligible proportion of income is a number between zero and one. If the eligible proportion is zero, the corporation is not eligible to claim a tax refund for the tax year.
• If the corporation’s net income as determined under section 3 of the federal Act for the tax year (i.e., the amount in Box 10A) is zero, the eligible proportion of income is zero.
• If either Adjusted income (Box 12A) or Total adjusted IB income (Box 12D) is zero, the eligible proportion of income is zero. 

Box 12D (total adjusted IB income (loss)) - enter the amount of total adjusted IB income (loss) from either the Statement of Adjusted IB Income, Option A (FIN 575) (PDF, 70KB) or Option B (FIN 576) (PDF, 80KB) for the corporation. If the total is negative, enter 0 (zero). See section 14 in this guide below for information on these forms.

Box 12F (eligible proportion of income) - the eligible proportion of income is the result of dividing Box 12D by Box 12E and must be a number between zero and one. This amount goes to Box 13A. 

Where the amount determined as the eligible proportion of income is greater than zero and less than one, the result must be calculated to six decimal places and entered in Box 12F.

If this amount is zero, the corporation is not eligible to claim a tax refund for the tax year.

Section 13. Calculation of Tax Refund (FIN 578) 

This section calculates the tax refund for a corporation that carries on an international business, other than an international patent business (FIN 578). See the next section in this guide below for calculation of tax refund for the international patent business (FIN 546).

If the corporation has income allocated to more than one jurisdiction or has provincial tax credits, T2SCH5, Tax Calculation Supplementary – Corporations, is applicable.

Box 13B (net B.C. tax payable) – if the T2SCH5 is applicable and Line 244 is a credit amount, then enter the amount as a negative number.

Box 13D (net tax payable) - if the amount in either Box 13B or Box 13C is negative, enter 0 (zero) in Box 13D.

Box 13F (tax refund claim) – the amount claimed must not exceed Box13E, but may be a lesser amount.

Box 13G and 13H – only complete these boxes if you are filing an amended return.

Box 13G (tax refund previously determined) - if this is an amended IBA return, enter the amount of the tax refund previously determined for the tax year.

Box 13H (tax refund) - enter the amount obtained from subtracting Box 13G from Box 13F if applicable. An amount is owed to the ministry if Box 13H is negative. Interest will be charged on all amounts owing. See section 8 in this guide above for further instructions on amounts owing.

Section 13. Calculation of Tax Refund (FIN 546)

This part calculates the tax refund for an international patent business (FIN 546).

If the corporation has income allocated to more than one jurisdiction or has provincial tax credits, T2SCH5, Tax Calculation Supplementary – Corporations, is applicable.

Box 13B (net B.C. tax payable) – if the TSCH5 is applicable and Line 244 is a credit amount, then enter the amount as a negative number.

Box 13D (net tax payable) - if the amount in either Box 13B or Box 13C is negative, enter 0 (zero) in Box 13D.

Box 13F (eligible tax refund) – the eligible tax refund is limited to 75 per cent of B.C. corporate income tax paid in relation to the international patent business carried on by the corporation.

Box 13G (refund limit) - the refund limit for a corporation that carries on an international patent business in a tax year is $ 8 million. For corporations that are registered for less than 365 days in a tax year, the $8 million limit is prorated based on the number of days registered divided by 365. Enter either $8 million or the prorated portion of $8 million in Box 13G.

Box 13H (associated corporation refund limit) - the $8 million refund limit must be shared among associated corporations where each corporation is eligible to claim a tax refund for an international patent business. Associated corporations have the same meaning as in section 256 of the federal Act.

If the corporation is not part of an associated group of registered corporations, enter $8 million in Box 13H. 

If the corporation is part of an associated group of registered corporations that are each eligible to claim a refund for an international patent business, enter the amount allocated to the corporation in Box 13H. 

An agreement must be filed by the associated group of corporations with the ministry. This agreement allocates the $8 million refund limit to the associated corporations for each tax year in which any member of the associated group is claiming an IBA tax refund for an international patent business. 

Box 13J (tax refund claim) - the amount claimed must not exceed Box 13I, but may be a lesser amount.

Box 13K and 13L – only complete these boxes if you are filing an amended return

Box 13K (tax refund previously determined) - if this is an amended IBA return, enter the amount of the tax refund previously determined for the tax year.

Box 13L (tax refund) - enter the amount obtained from subtracting Box 13K from Box 13J, if applicable. An amount is owed to the ministry if Box 13L is negative. Interest will be charged on all amounts owing. Please refer to section 8 above for further instructions on amounts owing.

Section 14. Supporting Documentation and Attachments

Statement of Adjusted IB Income - See the guide on how to complete the Statement of Adjusted IB Income - Option A (FIN 575) (PDF, 70KB) or Option B (FIN 576) (PDF, 80KB) for information on completing either FIN 575 or FIN 576.

Authorization or Cancellation of a Representative - If the corporation already has a valid Authorization or Cancellation of a Representative (FIN 146) (PDF, 260KB) on file with the ministry, it is not necessary to include a copy of the form with the return. To authorize or change a representative for the IBA program, attach a completed FIN 146 (PDF, 260KB). The authorization remains in effect until it is cancelled. See the guide for registration of a corporation for further information. 

Attachments

Financial statements and corporate income tax return (T2) filed for the tax year - Provide a copy of the corporation's complete financial statements, including notes to the financial statements and the complete T2 package. The complete T2 package includes all federal and B.C. schedules including T2SCH427, British Columbia Corporation Tax Calculation, and the corporation's General Index of Financial Information (GIFI) information, filed with the CRA for the tax year.

Notices of Assessment or Reassessment for the tax year - Provide a copy of all Notices of Assessment or Reassessment issued by the CRA for the tax year. An IBA return must be filed with the ministry within 18 months of the end of the tax year in order to claim a tax refund. If the Notice of Assessment cannot be provided, please include a written explanation with the return.

Statement of Account - If there is a balance owing on the Notice of Assessment or Reassessment, provide a copy of the Statement of Account issued by the CRA to provide proof that all amounts have been paid.

List of Directors and contact information - Provide an up-to-date list of the corporation’s directors. In addition please provide a complete list of key corporate contacts and their emails, phone numbers, titles, and business mailing address.

List of related or affiliated persons - Provide a list of all related or affiliated persons of the corporation. Related and affiliated persons have the same meaning as in the federal Act.

List of international financial activities or qualifying transactions - Provide a complete list of the international financial activities or qualifying transactions undertaken by the corporation. See international financial business, international film distribution business and international patent business for additional information.

Additional documents may also be requested to support the refund claim, depending on the corporation's specific circumstances. Documents may include, but are not limited to:

• copy of the trial balance,
• copy of the general ledger account details,
• detailed working papers of how the corporation calculated the IB income,
• copy of reconciliations, working papers and other documentation prepared to support the refund claim, together with the backup supporting records. This could include explanations and or sample documentation showing how the corporation determined that the transactions claimed were eligible, and
• copy of invoices and other original source documents in support of the refund claim.

Section 15. Certification

Provide the required information in the appropriate spaces. The person who signs and dates the form must be an authorized signing authority of the corporation. 

Send us your return

Mail or courier your return to the Ministry of Finance, Income Taxation Branch:

• Mailing address: PO Box 9444 Stn Prov Govt, Victoria BC V8W 9W8
• Courier address: 1802 Douglas Street, Victoria BC V8T 4K6

Contact us

• Victoria: 250-953-3082
• Vancouver: 604-660-2421
• Toll free within Canada and USA: 1-800-663-7867
• Outside of Canada/USA: 1-604-660-2421