Taxation 1

Front 1

What are the three steps for calculating childcare deductions?

Back 1

1. Calculate lower spouse's deductions

2. Calculate higher spouse's deductions

3. Lower spouse deduction - higher spouse deduction

Hint 1

Lower: annual, actual, 2/3 EA

Higher: Ann., Act., 2/3 EA, Periodic [Annual x 2.5% X # wks]

Front 2

What are the annual cost limits for childcare deductions?

Back 2

- $8000 for child 0-6

- $5000 for child 7+

- $11000 for severely disabled child

Front 3

Name some examples of PUPs

Back 3

Furniture, boats, cars, vacation homes

Hint 3

These are things that won't typically gain value over the years

Front 4

Name some examples of LPPs

Back 4

Coin collection, stamps, art, jewelry, rare things

Hint 4

These things will typically increase in value over the years

Front 5

What is the Floor Rule?

Back 5

Applied to PUPs and LPPS, Proceeds of Disposition and Adjusted Cost Bases must be minimum $1000

Front 6

What is the calculation process for RSP Deductions?

Back 6

Find the lesser of:

* Actual contribution dollars

* Government limit: $25,370 - pension adjustment + unused room

* EA: (18% * Earned Income) - Pension Adjustment + Unused Room

Front 7

How long can a taxpayer carry forward NET capital assets?

Back 7

FOREVER :)

Front 8

True or False: Personal Use Property can be carried forward 3 years

Back 8

False! There is no carry forward OR backward for PUPs

Front 9

An employee is given a loan of $100,000 on February 15. The CRA's prescribed rate is 3%, and the employee's rate is 2%. What is the employee's interest benefit?

Back 9

100,000 * (3%-2%) * (319/365 days)

$873.98

Front 10

What is the class number and depreciation percentage for software?

Back 10

Class 50, 55%

Front 11

Define the calculation for calculating bond interest for corporations.

Back 11

Principle x interest x days outstanding

Front 12

How is the Employer's portion of life insurance premiums credited?

Back 12

The employer's portion is a taxable benefit, so would be noted as extra income

Front 13

If a taxpayer is driving an employer-leased vehicle, how is the standby cost calculated?

Back 13

2/3 x least cost/month x months available to employee

Front 14

Rental income is calculated as:

Back 14

Rental revenue

- rental expenses (I.e., maintenance, property tax)

= rental income

- CCA

= net rental income

Front 15

What is the tax credit distribution for donating to Politics?

Back 15

First $400 = 75%

Next $300 = 50%

Next $525 = 33.3%

Total = $650

Hint 15

First 400$ = 75%

(2 more subsequent brackets)

Front 16

What is the tax credit distribution for charitable donations?

Back 16

15% of first $200

29% of additional donations

Front 17

How does one calculate straightline deductions in capital allowance?

Back 17

ccc

Front 18

What are the guidelines for Class 10.1 assets?

Back 18

ddd

Front 19

What is the rule regarding deducting expenses from commission when calculating income?

Back 19

if expenses are greater than earned commission, then the taxpayer is unable to claim commission as income

Front 20

Describe the differentiating factors between the Caregiver Credit and the Infirm Dependent Credit.

Back 20

Caregiver - Parents/grandparents do NOT have to be infirmed if +65 years old.

Caregiver -

Provides in-home care for certain adults

Infirm Dependent -

Dependent does NOT have to live with the taxpayer (i.e., can live in a facility)

Front 21

What is the Family Caregiver Amount?

Back 21

$2093

*can be added to spousal, eligible dependent, caregiver, and infirm dependent tax credit

Front 22

Provide some examples of deductible expenses for home work spaces.

Back 22

Any of the below operating/maintenance expenses:

*Mortgage interest

*Rent

*Property Taxes
*Insurance

*Business phone line

Front 23

If a home work space occupies 300 square feet of a 1200 square foot home, what percentage of expenses can be deducted?

Back 23

25%

The taxpayer can only deduct the portion of space that is occupied strictly for work.

Front 24

What is the calculation for the exempt portion of a principal residence gain?

Back 24

Capital Gain

X

(1+# of years designated PR) / # of years owned

Front 25

When a person owns ONE residence, the gain will _________; In a situation where more than one residence is owned, the taxpayer may designate _______ home(s) as the principal residence(s).

Back 25

always be full exempt; ONE

Front 26

In calculating childcare deductions, the parents will claim the lesser of these amounts:

Back 26

1. Actual amounts spent (remember special rules for camps);

2. Annual limits;

3. 2/3 Earned Income (EA)

4. **For HEA Parent only** Annual limit x 2.5% x number of wks LEA parent unavailable disposed

Front 27

What is the process individuals must use for reporting interest income?

Back 27

Individuals will use a blend of accrual and cash methods

Front 28

What is the maximum amount of time that may be claimed for food/lodging when calculating moving expenses?

Back 28

15 days

Front 29

Property income is comprised of

Back 29

Interest

Dividend

And rental income

Front 30

True or False: Legal fees are deductible

Back 30

True! Subtract them when calculating Div B.

Front 31

True or False: Spousal and child support are taxable income

Back 31

False

Only spousal support can be credited as taxable income; child support is non-taxable, and would not be recorded.

Front 32

Which 3 tax credits should be included as soon as we find out someone's employed?

Back 32

1. CPP

2. EI

3. Employment Credit (lesser of employment income or $1161)

Front 33

What is the maximum EI tax credit?

Back 33

$955

Front 34

What is the maximum CPP tax credit?

Back 34

$2544

Front 35

What is the Child fitness credit?

Back 35

Max. $500

Front 36

What is the Caregiver Tax Credit?

Back 36

$4,667

Front 37

What are two important steps to remember when calculating tax rates?

Back 37

1. Start by finding the taxable income closest to the amount in column A of the Tax Rate chart, calculate the corresponding tax percentage

2. Multiply the excess by the next highest marginal rate

Add the two numbers together for Gross Federal Tax

Front 38

What is the Disability Tax Credit?

Back 38

$8001.

Front 39

What is the child supplement for the Disability Tax Credit?

Back 39

$4667. Add to the $8001 of the Disability Tax Credit

Front 40

Business Revenue is comprised of:

Back 40

All sales sold and receivable;

Previously written-off bad debts that are connected

Front 41

Business Income is ___% taxable, while Capital Gains are ___% taxable.

Back 41

100%, 50%

Front 42

Business Income is ___% taxable, while Capital Gains are ___% taxable.

Back 42

100%, 50%

Front 43

To calculate Gross Profit when calculating Business Income, we:

Back 43

-Calculate Revenue

-subtract

--COGS

--Expenses

--CCA

= Net Income for Tax Purposes

Front 44

Exemptions from Business Income include:

Back 44

- personal expenses

- charitable/political donations

- salaries/wages paid to self

- life insurance premiums (unless business-required)

Front 45

What turns Div B income into Div C income?

Back 45

The reduction of loss cfwds from Net Income.

Front 46

Remember to include _____ carry-forward when calculating Div B income; ____ and ______ will be used after to calculate Div C income.

Back 46

LPP

Net/Non Capital

Front 47

True or False: Net Capital Loss cfwd should always be calculated first

Back 47

True! Net capital loss can only be used against Taxable Capital Gains.

Front 48

Non-capital losses are made up of:

Back 48

Losses from employment, property, and business

Hint 48

Applicable to any income

Front 49

Non Capital Loss can be claimed on income, so long as:

Back 49

A) the losses do not exceed the year's income;

B) the cfwd is within 20 years;

C) the carryback is within 3 years

Front 50

If Mr. X has a taxable income of $62,000, what is his Gross Federal Tax?

Back 50

1. Calculate closest excess point;

$45282 tax = $6792

2. Calculate excess $$$

62000-45282 = 16718

3. Calculate the marginal rate on the excess $$$

16718*20.5% = 3427

4. Add together the federal tax and marginal rate

6792+3427 = 10219

Front 51

The maximum amount of tuition/textbook/education credit that can be transferred to a parent, spouse, or grandparent is:

Back 51

$5,000

Front 52

What is the age requirement for the Age Credit, and what is the amount? When is the credit eliminated?

Back 52

Canadian residents aged 65+;

Credit = $7,125

Eliminated when net income exceeds $83,427

Front 53

Corporations not not allow the following deductions:

Back 53

- Charitable/political contributions

- life insurance premiums (unless required for collateral)

- membership fees for dining/sport/Rec facilities

- foreign print/broadcast directed to Canadian markets (ie., American publication targeted at Cdns)

Front 54

What are the questions to ask when a disposal or sale occurs for Corporations?

Back 54

1. Did a capital gain/loss occur?

2. Did an accounting loss/gain occur?

3. Did a terminal loss/recapture occur?

Front 55

Appraisal fees are deductible for Corporations only in 1 scenario:

Back 55

Deductible if the appraisal is for insurance reasons.

Front 56

Amortization of bond discounts, write-downs on assets, and charitable donations are examples of what should/n't be included in Schedule 1 calculations.

Back 56

These should not be included.

Front 57

Amortization of bond discounts, write-downs on assets, and charitable donations are examples of what should/n't be included in Schedule 1 calculations.

Back 57

These should not be included.

Front 58

When calculating Corporation's business incomes, we _____ amortization and _______ CCA

Back 58

We add back amortization, and we deduct CCA

Hint 58

Remember: AA

Front 59

When recording CCA disposals, remember to record the _____ of costs and proceeds.

Back 59

Lesser

Front 60

CCA is considered recaptured when:

Back 60

When UCC is negative prior to claiming CCA

Front 61

Terminal Loss occurs in CCA when...

Back 61

...There is a remaining balance in a class even after all assets have been sold/disposed of

Hint 61

Leftovers

Front 62

What are class 8 assets?

Back 62

comprised of: machinery, equipment, furniture, and fixtures

Rate: 20%

Front 63

Traveling costs, food and lodging, and furniture storage are included in...

Back 63

Moving expenses!

Front 64

Legal expenses and transfer taxes are incurred only when...

Back 64

The taxpayer has owned and sold his previous residence (no renters)

Front 65

Moving expenses typically break down to four categories:

Back 65

1. The costs of selling an old home;

2. Costs of buying the new home;

3. Costs of moving from one location to another

4. Idk

Front 66

Moving expenses that are _____ than income at new job can be carried _____.

Back 66

Moving expenses that are greater than income at new job can be carried forward in the following year.

Front 67

The dividend tax credit will be calculated by multiplying ___ by ____.

Back 67

The Grossed amount by either 15.02% or 10.52%

Front 68

The dividend tax credit will be calculated by multiplying ___ by ____.

Back 68

The Grossed amount by either 15.02% or 10.52%

Front 69

The medical expense credit is calculated by:

Back 69

15% x (qualifying medical expenses - the lesser of <3% net income or $2237>)

Front 70

What are the weekly limitations on camps/boarding school for childcare deductions?

Back 70

200$ for ages 0-6

125$ for ages 7+

275$ for severely disabled