Ch.23 Charitable Donations

Question 1

Charitable donations

Answer 1

Individuals receive a tax credit for charitable donations
corporations are able to deduct charitable donations from net income for tax purposes in the determination of taxable income
deduction is limited to 75% of the corporation’s net income for tax purposes for the year
Any charitable donations that are not used in a year — either because they exceed the 75% limit or because the corporation chooses not to claim them — may be carried forward and used in any of the following five years,

Question 2

Loss carryovers

Answer 2

same for all taxpayers, individual and corporate.
Loss carryovers are a Division C deduction
These net capital losses may only be claimed in a year when there are sufficient taxable capital gains. If an allowable business investment loss (ABIL) is not used in the 10-year carryforward period, it is added to the net capital loss balance at that time.

Question 3

Dividends received by a corporation resident in Canada

Answer 3

both individual and corporate taxpayers include the amount of the dividend in net income
Only individuals are required to add a gross-up to the dividend in computing income
Recall that individuals also receive a dividend tax credit to reduce taxes payable for any dividend on which a gross-up was included in income. The dividend tax credit does not apply to corporations.
corporation is entitled to deduct the full amount of dividends received from taxable Canadian corporations in arriving at taxable income= not taxable