Skip to content

Alternative Minimum Tax, and Deduction for Logging Tax

January 20, 2026

Lire en français

Alternative Minimum Tax, and Deduction for Logging Tax

The AMT is a special federal tax system that ensures taxpayers with many deductions or credits still pay a minimum amount of tax. It is calculated alongside your regular tax. If your regular tax is less than the AMT, you pay the AMT instead. Major changes to the federal and Quebec AMT rules came into effect for the 2024 tax year, and will also apply for 2025 and subsequent years. The Quebec AMT exemption increased to $175,000 in 2024 and is indexed for 2025.

Who it affects:

Taxpayers with large deductions or credits, such as:

  • High RRSP contributions
  • Large charitable donations
  • Certain investment deductions or capital gains exemptions, for example:
    • Deducting a loss with respect to a tax shelter on line 164
    • Loss from rental or leasing property
    • Investments in resources
    • Large deductions on lines 241 and 287

How it works:

  • Calculate your regular taxable income and the tax you owe.
  • Adjust your income by adding back certain deductions and credits to get AMT income.
  • Calculate the AMT on this adjusted income.
  • You pay whichever is higher: regular tax or AMT.

AMT Base Adjustments:

To calculate the "Adjusted Taxable Income" (ATI), several adjustments are made to your regular taxable income:

  • Capital Gains: The inclusion rate for capital gains is 100% for AMT purposes, compared to the 50% rate in the regular tax system.
  • Stock Options: The deduction for employee stock options is completely disallowed, meaning 100% of the benefit is included in the AMT base.
  • Donations of Securities: The capital gain on donations of publicly listed securities, which is typically exempt, is included at a 30% rate for AMT purposes.
  • Limited Deductions: Certain deductions, such as childcare, moving expenses, and interest expenses to earn income from property, are limited to 50%.
  • Carry forward: The amount of minimum tax paid can be carried forward and applied to reduce taxes in future years.

Example :

Alexandre is a Quebec resident, and his employment income is $400,000.00 and Rental income is $10,000.00 and mortgage interest is $200,000.00

Answer:
Federal: Minimum Tax Payable: $1,234.36
Quebec: Minimum Tax Payable: $5,123.88.
Both amounts can be carried forward to be applied in future years against tax payable.

Logging tax (line 17 of Schedule E)

Taxpayers who conduct logging operations in Quebec and pay the Quebec logging tax can claim a deduction on their federal and Quebec provincial tax returns. The deduction is calculated differently for each return. he federal logging tax credit reduces your net federal tax payable. There is no specific line for this credit on the main T1 return. Instead, you subtract the allowable credit from your net federal tax on Schedule 1. The deduction for logging tax is claimed on Schedule E of your Quebec provincial tax return (TP-1).

Credit calculation:

  • 66.67% of the logging tax you paid to the province.
  • 6.67% of your net logging income in that province for the year