You’ll need to use the TP-776.42-V to find out if you need to pay the alternative minimum tax (AMT) this year, or if you want to claim a deduction for the AMT you might have paid in the past 7 years. The AMT was designed to prevent wealthy residents of Québec from paying little to no income tax through the use of certain preferential tax treatments (like those listed below). A special tax rate is applied to your income if you reported or claimed certain amounts (such as a taxable capital gain or loss) on your return and if this tax amount is more than the federal tax calculated in the usual way, then you would need to pay minimum tax.
To calculate your federal AMT, complete the T691: Alternative minimum tax form.
Tax Tip: If you paid minimum tax in any of the past 7 years but you aren’t subject to the AMT this year, you might be able to claim credits against your 2018 taxes for the taxes you’ve previously paid.
How do I know if I need to complete form TP-776.42-V?
You’ll need to complete form TP-776.42-V to determine whether you’ll need to pay minimum tax if:
- You’re reporting a taxable capital gain and you’re claiming a capital gains deduction
- You’re deducting a loss for a tax shelter
- You’re claiming a deduction for interest and carrying charges you paid for:
- Flow-through shares
- An interest in a partnership you’re a member of, but with limited involvement
- A tax shelter
- Rental property
- An investment in a film production
- Investments in resources
- You’re claiming a deduction for exploration and development expenses, for exploration expenses specifically from Québec, or for certain films
- You’re claiming a deduction for certain Québec-specific investments, like investing in Québec resources or in a Cooperative Investment Plan (CIP)
What is a preferential tax rate?
Preferential tax means that the applied tax rate is better than it would be on a normal salary or interest income.
Where do I claim this?
Follow these steps in H&R Block’s 2018 tax software:
Before you begin, make sure you told us that you lived in Québec on December 31, 2018.
- Under the PREPARE tab, click the OTHER icon. You'll find yourself here:
- Under the MISCELLANEOUS heading, select the checkbox labelled Alternative minimum tax (TP-776.42-V), then click Continue.
- When you arrive at the Alternative minimum tax page, enter your information in the software.