ch2: Employment income and Expenses Flashcards
Step 1 - Identification
- first and last name
- email addr
- SIN
- DOB
- DOD
- Language
- Marital Status
- RESIDENCE INFO
- Spouse/common law info
STeP 1 - Residence
- last day of year in cda
- date of departure from canada
- Date of death
residence determines province for calculating tax
If biz- pays tax in prov located even if diff from owner
Indian act - Exempt Income
CRA form : T90 - Income exempt from tax under the indian act
climate action incentive
- if TP loves outside CMA (census metropolitan area) get additional 10%
- now called canada carbon rebate
specified foreign property
all cdn res must report income from all sources (in/out of cda)
ensures all foreign income reported
if over $100k–> fill out T1135 - FOREIGN INCOME VERIFICATION STMT
NOTE; based on COST , value doesnt matter
FOREIGN PROPERTY: TYPE OF PROPERTY SUBJECT TO REPORTING
- money in foreign bank
- foreign rental property
- shares in foreign corp
- foreign mutual funds (except cdn mutual funds w fx inv)
FOREIGN PROPERTY: Not included
- foreigh property for personla use not incl
RRSP that contains foreign investments more than $100k
Foreign Propeerty: simplified method
- if have specified foreign property less than $250k, option to use simplified or detailed method
paart A - simplified metho
Part B - detailed method
Penalty for failing to file T1135
$25/DAY MAX $2500
Employment income
- reported on Line 10100
- includes income from office and emplpyment
an office
any position an individual is elected to by popular vote or elected or appointed a representative - i.e judge, member of parliament
employment income
INCOME FROM A SOURCE IN WHICH THERE IS EMPLPYER/EMPLOYEE RELATIONSHIP
Employee vs Self Employed: EMPLOYEE
Depepnds on degree of control
employee;
- controlled and directed by employer in terms of work to be done,
- when,where,how work to be done
- received wages, salaries, tips
- benefits: vacation, sick days, health care, pension
- received T4 slip
Employee vs Self Emplpyed: SELF EMPLOYED
- Depends on degree of control
- free to determine products and services they provide
select customers to be approached, hours worked, prices charged
can hire others
invoice customers to get paid
no additional pay or benefits
t4 slips
must be received by last day of febuary
t4 slip: Box 14
- incl all taxable remuneration received from employer
- enter on line 10100
t4 slip: amounts reported in box 14
- salary/wages
- commission
- bonuses
- vacay pay
- taxable allowances and benefits
- Corporate Directors fees
- Gratuities/ Honoraria
T4 slip: Other Information section
- free/ subsidized housing, meals, board and lodge
- allowances for travel in prescribed zone
- personla use of emplpyer auto
- interest free/ low interest loans
- stock option benefits
- other taxable allowances and benefits
other info sect: non taxable allowances and benefits
on T4 slip for information only, not entrered on tax return:
- special work site allowances or benefits
municipal office expense allowances
Emergency services VOLUNTEERS exemption
- NOT SUBJECT TO TAX ON 1ST $1000 OF INCOME FROM GOV, MUNICIPALITY, OTHER PUBLIC AUTH
T4 BOX 14 shows amount above $1000
B87: EXEMTP PORTION
EMERG SERVICE VOL. : Vol. firefighter amt OR search and rescue vol amt
- may qualify for either
- if claiming either: full pmt feom authority becomes taxable
- will need to add amount from box 87 on T4 and include in icome (LINE 10100)
CREDITS, DEDUCTIONS, AND OTHER AMOUNTS ON T4 SLIP
- BOX 16/17: CPP/QPP
- BOX 16A/17A: 2ND contrinutions (2024)
- box 18 :EI premiums
- Box: 20: RRSP
- Box 22: income tax
- Box 44: union dues
- box 46: charitable donations
Other Employment Income: LINE 10400
-Casula labour, odd jobs
-Tips, gratuities (direct tips)
- Group sickness + accident plans– incl T4A wage loss
- Research grants
- Veterans benefits
- Medical premium benefits (paid by employer, NOT medical ins premiums )
- Group term life ins premiums
- Employee profit sharing plan (EPSP)
-Royalties from work or invention
wage loss replacement plans
what are they:
-Employer funded group accident /ins plan
Conditions To qualify as wage loss replacement plan
-Plan covers more than 1 emplpyee
-Funded in whole or part by employer
-Purpose is to compensate employees for loss of income
-Benefits paid periodically, not lump sum
-Plan involves formal insurance contract/follows insurance principals
Taxation of income from plan depends on who paid premiums + degree of control employer has over plan
rules for wage loss replacement plans
