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66 Cards in this Set
- Front
- Back
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What is the Standby Charge benefit calculation (owned and leased) |
Owned: 2% x Cost (max 30k) x # months avail (REDUCED - RSBC = same as above x (personal km/1667x# mths) Leased: 2/3 x monthly lease (max 800) x months avail |
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What is the calculation of the operating cost benefit? |
Lower of: 1) 0.27 x personal km 2) 50% x SBC |
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What is a reasonable allowance for cars by employees? and reasonable deduction for employers? |
- first 5000 km = 0.59/km - balance = 0.53/km |
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What are the work from home deduction conditions (4) |
1) where employee principally works (home workspace > 50% work done) OR 2) workspace ONLY to earn employment income and used on regular basis to meet customers - self-employed or employer signs T2200 - cannot use deduction to create loss |
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What are deductible home expenses? |
- supplies, telephone, internet - utilities and maintenance = prorated - property tax and home insurance = prorated - rent = prorated |
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Dividend gross up and tax credit for: - Eligible - Non-Eligible |
Eligible: - Gross up = 38% - DTC = 6/11 Non-Eligible: - Gross up = 16% - DTC = 9/13 |
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To defer CG receivable, you take the lessor of: |
1) 1/5 of the CG x (5 - past yrs) 2) (balance POD/ POD) x CG |
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What is the principal residence exemption calculation? |
(1 + yrs designated) / (total yrs owned x CG) |
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What is the stock option benefit calculation? |
# shares x (exercise price - option price) |
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When do you include the SOB for 1) CCPC’s 2) non-CCPC’s |
CCPC = at sale date, include SOB and TCG Non-CCPC = SOB at exercise date and TCG at sale date |
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What are the carry over/back rules for: 1) net capital losses 2) non-capital losses 3) Donations |
1) net capital losses - only against TCG’s: - CF indefinitely - CB 3 years 2) non-capital losses - against any source of income: - CF 20 years - CB 3 years 3) Donations - CF 5 years |
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Lifetime Capital Gain Exemption can only be used against disposal of QSBC which meets all 4: |
1) CCPC 2) FMV of assets used in active business > 90% at sale 3) Seller owned shares for past 24 months 4) FMV assets used in active business > 50% in Canada over 24 months |
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Childcare deductions is the lower of (3): |
1) amount paid 2) 2/3 of earned income 3) - 8k for child under 7 - 5k for child 7-15 - 11k for disabled child |
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What are the eligible moving expenses to deduct? |
- family travel expenses - transport + storage - meals and accommodations (max 15 days) - lease cancellation or selling costs - legal services, transfer taxes, registration, taxes on new residence - expenses paid to maintain old residence |
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What is the donation tax credit? |
15% x $200 29% x balance |
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What is the political contribution tax credit? |
75% x $400 50% x $350 33% x $525 |
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What is the basic corporate tax payable rate? |
+ 38% Basic - 10% FTA - 19% SBD (lessor of 3) |
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What is the SBD calculation? Lessor of 3 |
1) Taxable income 2) ABI in Canada 3) annual business limit 500k |
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What is the RRSP contribution room calculation? |
Beg RRSP unused room + lessor of: 1) RRSP dollar limit 2) 18% PY earned income Less: pension adjustments —— RRSP contribution room |
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About RESP? |
- investment earnings taxes at child tax rate when withdrawn - govt matches 1st 20% up to $500 per year - limit 50k per child |
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Attribution rules? |
Spouse: if election not taken, dividend income and CG’s are attributed back to seller Child under 18: only dividend income attributed back to seller (NOT CG until they turn 18) All income from property (dividend income) is attributed back to individual, therefore they must include it as their income CG incurred from property (CG on sale of asset) is attributed back to individual from SPOUSE only (NOT MINOR), therefore they must include it as their income |
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What are the differences of selling the shares or selling the assets of a company? |
Selling shares: - CG’s - Eligible for LCGD - CG carryover if reinvested in QSBC - ABIL if sold at loss - Legal liabilities sold with business - Simple transaction - Deemed YE before sale - if pmt of shares over time, use CG reserve to defer CG over 5 yrs Selling assets: - CG’s business income, invt income calculated for each asset —> tax payable for each - Deemed dividend computed on wind up - CG = POD - DD - ACB shares - tax + legal liabs remain with seller - admin work complex |
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What are the differences of buying the shares or buying the assets of a company? |
Buying the shares: - Assets retain tax attributes - Buyer inherits legal risks/liabilities - can use non-capital loss CF’s Buying assets: - no hidden liabs - can pick assets to buy/avoid - purchase price allocated per asset - buying assets at FMV = higher ACB = higher UCC to depreciate |
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What are primary and secondary residential ties? |
Primary: 1) Dwelling Place 2) Spouse 3) Dependents Secondary: 1) Personal Property 2) Social ties (memberships) 3) Economic Ties (Jobs) 4) Medical coverage 5) Drivers license 6) Passport |
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What are the tax implications for a permanent Canadian resident? |
Taxed on worldwide income |
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What are the tax implications for a Part-year Canadian resident? Date? |
Taxed on worldwide income for part of the year Date: Latest of: 1) Leave CAD 2) Spouse leaves CAD 3) Becomes resident of other country |
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What are the tax implications for a Deemed Canadian resident? |
Taxed on worldwide income |
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What are the tax implications for a Non-Canadian resident? |
Taxed on Canadian income |
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What are factors for a corporations residency? |
1) If incorporated after 1965, PERMANENT CAD CORP 2) If incorporated before 1965: a) M&M carried on in Canada = PERMANENT CAD CORP b) M&M left Canada = no longer permanent CAD Corp |
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Are Conventions deductible for businesses? |
Yes, 2 max a year and must be in business territory |
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What is the deduction rule for M&E and what are the 2 exceptions? |
M&E are 50% deductible 100% deductible if: 1) M&E for fundraiser event 2) 1/6 special events/year for ALL employees |
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Are Home office costs deductible? |
Costs deductible if: 1. the home is the principal place of business (>50%) OR 2. the work space is used exclusively for earning business income AND used on a regular basis for meeting customers or patients |
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What are the 3 deductions for businesses from NIFTP to Taxable income? |
1) Donations 2) CAD Dividends 3) Losses from prior years |
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Is employee theft deductible for businesses? |
Yes but not if involves key executive or shareholder |
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What are some differences between Employee and Self-Employed? |
Employee: - Limitations regarding expenses - Withhold tax - Must make EI and QPP/CPP contributions - Receives fringe benefits (Vac pay, med plans) - No GST/HST - Employer must pay payroll taxes Self-Employed: - Expense allowed if incurred to earn income - Quarterly installments - Optional EI contributions and must make 2 x QPP/CPP contributions - No fringe benefits - Opportunity for tax evasion - Must collect and remit GST/HST if earn > 30K - Employer doesnt pay payroll tax |
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Are non-cash gifts taxable? |
gifts under $500 annually are not taxable |
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Are employer related training courses taxable? |
No |
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Are personal interest courses taxable? |
Yes |
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Is private disability insurance taxable to employee? |
Yes |
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Is life insurance taxable to employee? |
Yes (if not required by bank) |
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Are employer contributions to TFSA and RRSP taxable to employee? |
Yes |
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Are employee contributions to RPP, group sickness/disability insurance, private health plan or DPSP taxable to employee? |
No |
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What are the taxation rules on social events for employees? |
The event is not a taxable benefit to employee if event is for ALL employees and costs less than $150 per person |
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What are amounts that can be received tax free by an individual? |
1. Life insurance 2. Insurance payouts from private health ins plan 3. Insurance payouts from disability ins plan if employer didnt pay the premiums 4. Lottery and gambling winnings (unless professional gambler) 5. Strike pay 6. Capital dividends from private Co CDA acct 7. Withdrawals from TFSA (income earned) |
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TFSA Info? |
- Can earn invt income on tax free basis - Contributions not tax deductible - Annual contribution room to plan is 6K or 80K total - Unused contribution room can be CF indefinitely |
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RESP info? |
- Allows contribution to fund post-secondary education for a qualified beneficiary - Contributions are not tax deductible - Max contributions 50K - Govt will contribute 20% max 500/yr upto 18 total $7200 - Income earned + grants from govt not taxable while in plan - Withdrawal by student: original contributions by parents not taxable but grants received and income earned are taxable to student - If money not used for education, grant from govt must be repaid and income earned in plan taxable to parents/contributor |
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RRSP info? |
- gives individual incentive to save for retirement - RRSP contributions are deductible and income earned in plan is tax free - at 71, total transferred to RRIF and annual withdrawals taxable - RRSP dollar limit = lower of 1. Dollar limit 29K or 2. 18% x PY earned income - Tax free withdrawal allowed for 1) Home buyer plan and 2) Lifelong learning plan - Unused portion can be carried forward |
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What are basic tax credits to know? |
- Basic Personal - Canada empl - Donations - Medical Expenses - DTC - Tuition - CPP, EI, QPP |
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What is the donations tax credit? |
15% x 200 29% x balance |
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What is the Capital Dividend Account (CDA)? |
contains the non-taxable portion of net capital gains that have been realized |
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What is the Part IV tax on dividends from non-connected corp? |
38 1/3% x CAD Dividend received |
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What is the Part IV tax on dividends from connected corp? |
Pro-rata % x Dividend refund |
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What is the Elig and Non-Elig RDTOH calculation? |
Elig: Beg Part IV tax on Eligible Div's Less: Div refund PY End Non-Elig: Beg Refundable Part I tax (CRIB SHEET) Part IV tax on Non-Eligible Div's Less: Div refund PY End |
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What is the dividend refund? |
lessor of: 1) RDTOH end (elig or non elig) 2) 38 1/3 % x Div paid (Elig or non-Elig) |
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what are advantages of incorporating? |
- Limited liability since separate legal entity - Lifetime CGD if company is QSBC - Flexibility on timing, type and distribution of income - Tax deferral if income retained by corporation - Tax reduction through income splitting by paying salaries and dividends to family members in low tax brackets subject to TOSI |
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what are disadvantages of incorporating? |
- cant use corporate losses against personal sources of income - Personal tax credits wasted - Charitable donation tax credit lower for corp - Additional maintenance costs (legal, accounting, govt forms, annual returns) - complicated wind up procedures - higher taxes |
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What is TOSI? |
Generally, dividends received from a family owned company by children or spose who are not actively engaged in business will pay highest tax bracket rate and no credits will be allowed other than dividend and FTC |
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Salary vs Dividend |
Benefits to Salary - Likely higher tax savings by paying salaries since higher corporate rates - need earned income to contribute to RRSP, CPP/QPP and to deduct childcare costs - Can use unused tax credits - Canada employment tax credit only available on employment income Benefits to Dividends - The higher the provincial DTC, the greater the tax savings by paying dividends - Added cost to paying salaries for corporations - Payroll taxes to pay with salaries - Can be eligible for a high dividend refund if corp has a CDA, dividends can be paid out tax free |
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Sell shares vs Sell assets |
Sell shares: - Simple trx - CG on sale 50% taxable - elig for LCGD if QSBC - if ABIL from loss on sale of SBC shares, can write off against any income - can CF unused non-capital loss - No transfer taxes - UCC bal's transfer usually lower than FMV - All assets and liabs (including hidden and credit rating) acquired
Sell assets: - Complex trx - Recapture 100% taxed - no LCGD - if depreciable assets sold at loss, can claim Terminal loss - non-capital loss carry over not available to purchaser - can record GW therefore claim CCA - dont have to purchase unwanted assets - not responsible for corps liabs
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When is the individual: Filing due date? Payment due date? |
Filing due date: Employee: April 30 Self-Employed: June 15 Payment due date: All: April 30 |
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When is the corporation: Filing due date? Payment due date? |
Filing due date: All: 6 months after FYE Payment due date: CCPC: 3 months after YE (if claiming SBD and TI < 500K) Other corps: 2 months after YE |
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When is individual required to pay by instalment? if so when are they due? |
if tax owing is over 3K in CY and either of last 2 years due quarterly starting March 15 |
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When is a corporation required to pay by instalment? if so when are they due? |
if tax owing is over 3K in CY OR PY due monthly or quarterly for small CCPC (TI < 500K, TCEC < 10M, claimed SBD, paid all tx on time last 12 months) |
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When should GST/HST returns be reported? (3) |
1) amount of taxable supplies <1.5M = Annual 2) amount of taxable supplies between 1.5-6M = quarterly 3) amount of taxable supplies > 6M = Monthly |
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When are the GST/HST returns be filed? |
for annual filers, 3 months after YE for quarterly and monthly filers, 1 month after reporting date |
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When are the GST/HST instalments triggered and when are payments due? |
instalments for annual filers if GST/HST remitted in PY >3K instalment due 1 month after each quarter annual filers below 3K must remit on filing date (3 months after YE) |
