You must file the Logging Tax Return of Income for Processors if you processed B.C. logs into primary or secondary forest products (e.g. lumber, shakes, shingles, poles, pulp, paper etc.).
Don’t use this return if you didn’t process logs. If you only have income from the sale of B.C. logs, standing timber, timber rights, or the export of B.C. logs you must file the Logging Tax Return of Income instead to report your income from logging operations.
For help completing your tax return, review what information you need to provide in the following sections:
If your business is a corporation under the Business Corporations Act or other legislation, enter that name as it appears on your incorporation certificate. If you are an individual, enter your full legal name (first name, middle initial, last name).
Only complete this field if:
Enter the street number and name, or PO Box, city, province and postal code.
To authorize a representative to act on your behalf you must complete an Authorization or Cancellation of a Representative (FIN 146) (PDF, 260KB). This form allows us to release information to your representative.
Enter the nine-digit Business Number (BN) that identifies your business for income tax purposes.
Complete this field only if you are an individual. Enter your Social Insurance Number.
If you know your eight-digit Logging Tax account number enter it, otherwise leave the field blank.
Enter the eight-digit client number assigned to you by the Ministry of Forests, Lands and Natural Resource Operations, if applicable.
Complete this field only if you are an individual. Enter either your driver’s licence number or BC ID number.
Indicate if this is the final year of logging operations. You will no longer need to file a logging tax return unless you resume logging operations. If you resume logging operations in the future, you must file a return with us at that time.
Enter the telephone number and email address for the person you want our office to contact if we need to verify information on your account.
To authorize a representative to act on your behalf you must complete an Authorization or Cancellation of a Representative (FIN 146) (PDF, 260KB). This form allows us to release information to your representative.
Indicate if you are requesting an adjustment to a return that has already been filed.
Indicate if the adjustment you are requesting is due to the application of a loss you are carrying back to previous tax years.
If it is, you must provide a copy of the Notice of Reassessment within 90 days of receiving it from the Canada Revenue Agency to show that they accepted the loss. If it is not received within the 90 days your request to adjust your return may be rejected. If more information is needed to support your claim we will let you know.
Once we have the information needed to support your claim you will be issued a refund. If the refund is issued more than 60 days after you provided the information you will receive interest with your refund. Interest is calculated from the 61st day after you provided the information to support your claim.
Enter the start and end date of the tax year for which this return is being filed. The start and end date must coincide with the federal income tax year.
Corporations with a floating tax year end must advise us of the occurrence of the end date. You can advise us by adding a note beside the End of Tax Year field, for example “last Saturday in September”, or including it in a cover letter.
Individuals who report business activities on their federal T1 Income Tax and Benefit Return (T1 Return) using an elected non-December year-end (as approved by the Canada Revenue Agency) must report the start and end dates on a calendar basis (January 1 to December 31.)
Logging operations to be reported on this return include the following:
If you have income from logging operations but do not operate or use a sawmill, a pulp and paper plant or another place for processing B.C logs within Canada you should use the Logging Tax Return of Income.
Logging income is generally gross revenue from logging operations less related operating expenses and calculated according to the federal Income Tax Act. If you record income from logging operations as a capital gain, the logging income is equal to the taxable portion of the capital gain.
An individual must report logging income based on the amount of net income from logging operations included and reported in net income on line 23600 of their T1 Return. If the net income on line 23600 includes logging income and other sources of income, and the logging income is not clearly identifiable on the T1 Return, you must include a schedule that shows how you have allocated the revenue and expenses between sources of income.
A corporation must report logging income based on the amount of net income from logging operations included and reported in net income on line 300 of the T2 Corporation Income Tax Return (T2 Return). If the amount on line 300 includes logging income and other sources of income you must include a schedule that shows how you have allocated the revenue and expenses between sources of income.
Enter the net income from the sale of logs obtained by the taxpayer:
You must report logging income from the sale of logs that were harvested on Crown land and on private land.
Enter the net income from the sale of standing timber or timber rights. This includes the sale of timber marks, licences, standing timber sold with or without land and the sale of a right to a logging contractor.
You must report logging income from the sale of standing timber, or timber rights, on Crown land and on private land.
Enter the fair market value of logs exported from B.C. net of expenses.
Add up the amounts on Lines 100, 110, and 120.
For a corporation, enter the amount on line 300 (Net income) of the T2 Return.
For an individual, enter the amount on line 23600 (Net income) of the T1 Return, plus the amounts, if any, reported on lines:
Enter the amount of net income from the taxpayer's non-forest or non-logging operations included in line 130.
Enter the amount from line 122 above.
Deduct the amounts on Lines 132 and 122 from the amount on line 130. This is your processing income.
Calculate 8% of the original cost of qualifying processing assets used to process logs and enter the result on line 140.
All qualifying processing assets must be owned and used for processing. Qualifying processing assets include:
Assets don’t qualify as processing assets if they are:
The minimum processing allowance is 35% of line 135 (processing income).
The maximum processing allowance is 65% of line 135 (processing income).
The median, or mid value, of the amounts on line 140, 142 and 144 is the processing allowance.
Deduct the amount on line 145 from the amount on line 135. This is the net processing income after deducting your processing allowance.
If you process logs cut from standing timber outside B.C. you may be able to deduct an amount for the non-B.C. net processing income. You will need to attach a copy of your calculation to the return.
The non-B.C. processing income is calculated as:
A x (B ÷ C)
where:
Deduct the amount on line 155 from the amount on line 150 to calculate B.C. net processing income.
Add up the amounts on Lines 122 and 160. This is your income derived from logging operations.
The logging tax is equal to the lesser of:
An individual’s adjusted federal taxable income is the amount reported on line 26000 (taxable income) of the T1 Return plus the amounts, if any, reported on lines:
A corporation’s adjusted federal taxable income is the amount reported on line 360 (taxable income) of the T2 Return.
Enter the amount from either Line 190 or 400, whichever is less.
Multiply the amount on Line 410 by 6 2/3%. Our assessing system and web forms use 6.666667% for this calculation.
An individual’s adjusted federal income tax otherwise payable is the amount reported on line 40600 (federal tax) of the T1 less the amount, if any, on line 41400 (labour-sponsored funds tax credit). You must add back the amount of the federal logging tax credit deducted, if any, in calculating line 40600 (federal tax).
A corporation’s adjusted federal income tax otherwise payable is the amount reported on line 700 (Part I tax) of the T2 Return plus the amounts, if any, on lines:
Enter the amount from either Line 420 or 430, whichever is less. This is the maximum federal logging tax credit.
Multiply the amount on Line 440 by 50% to calculate the maximum provincial logging tax credit.
Add up the amounts on Lines 440 and 450 and the result is your maximum logging tax credits.
Multiply the amount on Line 190 by 10% and enter the result on Line 700.
Enter the amount from either Line 460 or Line 700, whichever is less. This is the logging tax payable for the tax year.
Enter the total of all instalment payments for the current tax year.
Enter the amount of the prior year’s overpayment (if any) that you asked to be applied to the current year’s tax.
Add Line 840 and 842. This represents the amount paid towards this year’s logging tax payable amount.
Subtract the amount on Line 844 from the amount on Line 770. A positive amount indicates a balance owing. A negative amount indicates a refund.
If you have a balance owing, enter the amount of payment enclosed with the return and the date of the cheque. Please make the cheque payable to the Minister of Finance, include on the front of the cheque your logging account number and the tax year.
If payment is to be sent separately, enter 0 (zero).
If you have overpaid your instalment payments for the tax year you may have the overpayment either refunded or applied to the subsequent year by checking the appropriate box.
If neither box is checked, the overpayment will be refunded.
You must attach all items that are applicable. Additional documents may also be requested to support your calculation of logging tax payable for the tax year.
An individual must include a complete copy of their T1 return package filed for the tax year with the Canada Revenue Agency. The complete T1 return package includes the regular printed copy of all federal and B.C. provincial income tax schedules and any financial statements filed with the return.
A corporation must include a complete copy of the corporation’s T2 return package filed for the tax year with the Canada Revenue Agency. The complete T2 return package includes the regular printed copy of all federal and B.C. provincial income tax schedules.
Provide a complete copy of the financial statements for the tax year, including the notes to the financial statements.
You must include a schedule showing the reconciliation of the net income reported on your federal income tax return to the amount of the income derived from logging operations. The schedule should clearly show how you have allocated revenue and expenses.
Taxpayer information is confidential. The Ministry of Finance requires the taxpayer’s authorization to release confidential information to a person specified as their representative under the Logging Tax Act (such as a spouse, lawyer or an accountant). To arrange for an authorization, complete and submit an Authorization or Cancellation of a Representative (FIN 146) (PDF, 260KB). The authorization will stay in effect until it is cancelled.
The return must be signed and dated by the taxpayer or an authorized signing authority of the taxpayer.
You can submit your tax return, payment and supporting documents:
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