Chapter 19 - Taxes Payable - Personal Flashcards
Describe how Federal Tax Owing is Calculated
NIFTP
(Division C)
Taxable Income
X Federal Tax Brackets
(Non-refundable tax credits)
Basic Federal Tax
(FTC)
Federal Tax
(Income tax deducted at source)
(Installments)
(Overpayments of CPP or EI)
Taxes Payable
What are the non-refundable tax credits
Basic Personal Amount
Age Amount
Spousal or Common-law Parnter
Eligible Dependents
Canada Caregiver (Eliglbe and non-eligible)
CPP
EI
Canada Employment Amount
Disability amount
Disability Transfer
Adoption expenses
Medical Expenses
Home accessibility amount
Home Buyers
Pension Income
Student Loans
Tuition
– These you SUM and X 15%
**Donation Tax credit
**Dividend tax credit
**Foreign business/non-business income tax credit
Political contribution tax credit
What is the Basic Personal Amount - Given in the formula sheet
Available to everyone:
$13,808 for individuals with taxable income < $151,979
$12,421 for individuals with taxable income > $216,511
What is the Age Amount? - Given in the formula sheet
People who are 65 by the end of the taxation year.
$7,713
This is reduced by 15% by the individual’s net income > $38,893
What is the Spousal or Common-law Partner amount?
Available to people who are married or in a common-law partner, where one supports the other spouse.
$12,421 - $13,808.
This is reduced by the spouse’s net income for tax purposes. If they have more than $12,421 then they will not get anything.
What is the Canada Employment Credit
To help Canadian residents earning employment income.
Lesser of $1,257 and employment income earned.
What is the Eligible dependent credit?
$12,421 to $13,808
For individuals who are not entitled to spousal credit (single and supports a dependent relative - direct blood)
This is reduced by the dependent’s income.
Must live together.
Unless they’re a parent or grandparent - the dependent needs to be less than 19
Only one taxpayer may make an eligible dependent for a specific dependent. They need to make an agreement on who to take the claim (if both are eligible)
What is the Canada Caregiver Credit - Infirm adult dependant relative
$7,348
Available for people supporting an infirm adult - including children, grandchildren, parents, grandparents, aunts, uncles, nieces, or nephews.
Must be dependent - mental or physical infirmity
Does not need to live together
Reduced by NIFTP in excess of $17,256
Can’t be used for eligible dependents
What is Canada Caregiver Credit - infirm spouses/eligible dependents or infirm children under 18
$2,295
One Canada Caregiver credit is allowed for each infirm dependent.
It is added to the base of the credits claimed by the taxpayer for each infirm dependant:
- Spousal
- Equivalent to spouse
Also available on a standalone basis if the infirm dependant child is under 18.
CPP/QPP contributions (lesser of the amount paid and required contribution) ** don’t understand
Maximum CPP tax credit $2,876
Maximum Required Employee Contribution: (pensionable earnings - $3,500) x 5.45%
Maximum pensionable = $61,600
= $3,166.45
CPP Tax Credit
($61,600 - $3,500) x 4.95%
= $2,875.95
A maximum $290.50 is deductible in determining net income for the year.
Self-employed required to 2x pensionable earnings
If an amount greater than the contribution is withheld from the employee’s pay, excess is deducted.
1/2 of the contribution is separated into the amount for the CPP tax credit and the deductible amount and treated as above. Other half is deducted in determination of net income under “other” deductions.
EI Premiums (lesser the amount paid and required contribution) - maximum required: $890
The maximum required contribution is maximum insurable earnings x 1.58%
Maximum insurable earnings: $56,300 for 2021
If an amount greater than the contribution is withheld from the employee’s pay, excess is deducted.
Disability amount ** look at transfer of disability amount
$8,662
available for individuals who have an impairment that is expected to last for a continuous period of at least 12 months.
must be certified
credit cannot be claimed if they have claimed a medical expense tax credit for a full-time attendant or care in a nursing home
medical expense for a part-time attendant (less than $10,000) does not preclude this claim
Supplement for disabled children under 18 is $5053
The supplement is reduced by attendant care of childcare costs in excess of $2,959 that was deducted in the year. Therefore, if it’s more than $8,012 then it is eliminated.
Credit can be transferred to the spouse.
Adoption expenses (max per adoption)
$16,729
Available for individuals who adopt children under the age of 18.
Credit must be shared between spouses or common-law partners.
Eligible expenses are expenses incurred between adoption applicable and the time you get the kid or adoption order (the later of)
Credit can only be claimed when adoption is fianlized.
Medical Expenses - spouse, common law, children under 18
Lesser of 3% of net income or $2,421
Because of 3% limitation, better to claim on the lower income spouse, unless their credit is reduced to nil.
Home accibility amount
$10,000
for people over the age of 65
lesser of cost of elgiible renocations and $10,000
eligible renovations are made to improve safety and accesibility of a home.
