Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

WME > 8 -understanding Tax Returns > Flashcards

8 -understanding Tax Returns Flashcards

1
Q

Example of eliminating taxes

A

TFSA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Example of reducing taxes

A

Pension income splitting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Example of deferring taxes

A

Buy and hold equities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Deadline for individual tax return

A

April 30

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Deadline for self employed or unincorporated

A

June 15, but money owed is due April 30

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

T3

A

Statement of trust income

Interest, dividends and capital gains from mutual fund trusts in NR, also from estates and family trusts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

T4A

A

Pension, annuity and RESP income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

T5

A

Statement of Investment income

Interest, dividends and capital gains from CC mutual funds, holding companies issue these for dividend payments
HISA, GIC
Shares in nominee accounts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

8 items to calculate total income

A

Net employment income
Pension
Net business
Taxable dividends- grossed up
Interest income
Rental income
Taxable portion of capital gains
Other income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How is net income calculated

A

Subtract allowable deductions from total income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

6 common allowable tax deductions

A

RRSP contribution
Union dues
Child care
Moving
Carrying charges
Oil and gas flow through expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

How is taxable income calculated

A

Subtract additional deductions from net income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

4 examples of additional deductions

A

Stock options
Net capital loss from prior
Non capital loss from prior
Lifetime capital gains exemption

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

How to calculate taxes owing

A

Apply federal progressive tax rates to taxable income

From taxes owing subtract non refundable personal tax credits, dividend tax credits, and foreign tax credits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How to calculate net federal tax

A

From taxes owing subtract non refundable personal tax credits, dividend tax credits, and foreign tax credits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is a tax deduction

A

Reduces taxable income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is tax credit

A

Reduction on taxes payable, value is equal to lowest tax bracket

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Are support payments a tax deduction

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

10 main tax deductions

A

Pension contribution
RRSP contribution
Income splitting
Union dues
Childcare expenses
Business investment losses
Moving
Eligible support
Carrying and interest charges
Other employment expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

11 common federal non-refundable tax credits

A

Basic personal
Age
Spouse and dependent
Disability
CPP contribution
EI contribution
Medical
Political
Charitable
Pension income amount
Tuition credit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Average tax rate

A

Divide total amount of net taxes owing by taxable income dv

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Marginal tax rate

A

Rate applied to each additional dollar earned

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Effective tax rate

A

Dividing total amount of net taxes owing by taxable income

24
Q

4 types of investment returns

A

Interest (and foreign source dividends)
Canadian source dividend
Capital gains
ROC

25
Q

Eligible dividends

A

From Canadian corporation and is taxed at lowers rate

grossed by 38% then offset credit of 15.02%, about 20.73%

26
Q

Non eligible dividends

A

Tend to be small private businesses that receive special corporate tax advantages through small business deduction

27
Q

Problems with dividends for low income retirees

A

Gross up increases net income, therefore OAS and GIS could be clawed back.

Also age and medical credit may be reduced

Gross up could increase tax bracket

28
Q

How many years back can capital loss be applied

A

3 years

29
Q

How many years can net capital loss be carried forward

A

Indefinitely

30
Q

Superficial loss

A

Within 30 days after or before

31
Q

Return of capital

A

Distribution in excess of taxable income

May be due to large amount of non-cash deductions. Ie loss carry forward depreciation

32
Q

How is ROC taxed

A

Not taxable in year received, but original cost is reduced by distribution and new ACB is calculated

33
Q

Tax effect to employer of employer contribution to employee health benefits

A

Full tax deduction

34
Q

Tax effect to employees for employer contribution to PHSP

A

Not taxable benefits

35
Q

Tax treatment of employee paid premiums to PHSP

A

Can be claimed as medical expense

36
Q

Tax treatment of employer car allowance

A

Allowance in excess of reasonable amount, taxable benefit to employee

37
Q

Tax treatment of employees being reimbursed for business meals and entertainment

A

Not taxable benefit to employee

38
Q

Tax treatment of courses that employee takes ti benefit job

A

Not taxable benefit to employee

39
Q

Tax treatment of self improvement courses paid by employer and not related to business

A

Taxable benefit to employee. On T4

40
Q

Tax treatment of loans from employer to employee for home

A

The amount over the CRA prescribed rate is a taxable benefit to the employee

41
Q

Tax treatment of interest free loans to employees

A

Amount below prescribed rate is Considered taxable benefit to employee

42
Q

Tax treatment of interest free loan to executive employee to purchase minimum holdings of company shares

A

Interest free loan is taxable benefit to employee, but offset by deductible expense because it’s for investment

43
Q

Tax treatment of employer reimbursement of employee moving expenses

A

Not taxable benefit to employee

  • addition amounts are taxable. Ie cash incentive
44
Q

Tax treatment if employer does not reimburse moving expenses

A

Employee can deduct expenses if it’s within Canada and 40 km away

Deductible from income earned at new work location

45
Q

Standby charge

A

Amount included as income when employer makes company car available for personal use

*keep track of kms

Reduced if company use is over 50%
Reduced by amount employee pays for use

46
Q

2 components used to compute and separate taxable benefits

A

Standby charge
Payment of personal use costs

47
Q

Tax treatment of employer paid operating costs for personal use of company car

A

Included in employee income

48
Q

Amount CRA allows employers to charge employees for operating costs

A

Flat $0.28 per personal km

49
Q

Tax treatment of club membership that is part of business

A

Not taxable benefit to employee

50
Q

Tax treatment of employer paid gym membership

A

Taxable benefit to employee

51
Q

What is employee stock options

A

Permits employee to buy shares at stated price for stated period, usually 10 yrs

52
Q

Tax treatment of stock options when option is exercised

A

When/if exercised, the difference between FMV and exercised price is added to employee income that year. Plus fees

53
Q

Tax treatment when stock options are sold

A

Half of amount of the taxable benefit to employee can be used as a deduction if bought at FMV at arms length

54
Q

Difference in tax treatment of stock options with CCPC

A

Taxable benefit when exercising options can be delayed until options are sold

55
Q

Calculation for extra RRSP contribution room for retiring allowance

A

$2k for each year up to and including 1995 plus
$1500 for each year up to and including 1988, as long as employee wasn’t entitled to other pension during this time

56
Q

What does Cumulative net investment losses do

A

It reduces the available LCGE

WME (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions