Chapter 4 Flashcards
Tax Credit vs Tax Base
the credit base is a specific amount provided by legislation which can be found in Division E of the ITA; the tax credit is the result of multiplying the credit base by the appropriate percentage (usually the marginal rate)
118(1)
Personal Creits
are a reduction (not a deduction) against taxes payable
Non-Refundable Tax Credit
can only be used against the tax payable of the individual (and not “refunded”)
most are “use-it-or-lose-it” with noteable exceptions of the charitable donation credit and education credit
Refundable Tax Credit
a refundable amount will be paid to an individual if the tax credit exceedds the individual’s tax payable
Infirmity
infirmity is not defined in the ITA, but is taken to mean a
(1) physical or mental ailment
(2) non-temporary condition
(3) and requires the individual to be dependent on the taxpayer
Basic Personal Amount
118(1)(c)
an enhanced BPA is available to individuals whose NITP is less than or equal to $173,205 and the amount is $15,705
for individuals who earn more than $246,752 the BPA is $14,156
Spousal Tax Credit
118(1)(a)
an amount equal to (15%)(BPA - NITP of Spouse),
OR, for an infirm spouse
(15%)(BPA + 2,616 - NITP of spouse)
Eligible Dependant Tax Credit
118(1)(b)
tax credit available for a single, divorced, separated, or widowed taxpayer supporting a dependant
(1) under 18 (unless parent, grandparent, or related infirm)
(2) who is living with the taxpayer
(3) is related by blood, marriage or adoption
(4) and is dependent on the taxpayer for support
equal to (15%)(BPA - NITP of eligible dependant),
OR, for an infirm dependant
(15%)(BPA + 2,616 - NITP of spouse)
* a recipient of child support claims this credit
* calculation is same as spousal credit
* may only be used for one child
Caregiver Amount for Infirm Child
118(1)(b.1)
single or married individuals may claim an additional (15%)($2,616) tax credit for each mentally or physicallly infirm child, which is not decreased by the child’s income
Canada Caregiver
118(1)(d)
a tax credit of (15%)($8,275 - NITP of dependent)
for care for a dependent over 18 (not necessarily in-home) who is mentally or pysically infirm; one caregiver credit may be claimed for each infirm dependent
Age Tax Credit
118(2)
a tax credit of (15%)($8,790 - B)
where
B is 15% of the amount that NITP exceeds $44,325
is available for individuals who are 65 or older in the year
* may be transferred to a spouse if the taxpayer has insufficient income
Pension Income Tax Credit
118(3)
maximum credit of 15%($2,000) available on the first $2,000 of “eligible pension income” (excludes OAS and CPP)
* transferable to a spouse if the taxpayer has insufficient income
Canada Employment Tax Credit
118(10)
a tax credit for individuals with employment income equal to 15% of the lesser of $1,433 and the individual’s employment income before employment expenses
Home Accessibility Tax Credit
118.041(3)
qualifying individuals must be over 65 and eligible for the disability tax credit, who has incurred expenses that allow the individual to be more mobile or functional at a dwelling in Canada
tax credit equals 15% of the lesser of $20,000 and qualifying expenditures
First-time Homebuyers’ Tax Credit
for taxpayers who have not purchased a home in the preceding four years that purchase a home that they will occupy within a year is eligible to a $1,500 tax credit
Multigenerational Home Renovation Tax Credit
122.92
a tax credit of 15% of up to $50,000 of qualifyifying expenditures
CONDITIONS
(1) building a secondary unit to enable senior or disabled family member to live with family
(2) qualifying relation must be 18 or older and related
(3) qualifying individual must be 65 or entitled to the disability tax credit
(4) only $50,000 total may be claimed with respect to one qualifying individual in their lifetime, although there may be multiple claimants
Tax Credit for Gifts
118.1(3)
or Charitable Donations tax credit for
(B) 15% of first $200 of eligible gifts
(D) 33% of the lesser of
1. eligible gifts less $200
2. and taxable income less $246,752
(F) 29% of gifts in excess of $200 and the amount determined in (D)
- eligible amonts of charitable gifts limited to 75% of NITP or 100% in year of death and preceding year
- unused amounts may be carried forward 5 years
Disability Tax Credit
118.3(1)
a tax credit of 15% of $9,872 for an individual and an additional $5,758 for a child under 18 who
(1) has severe physical or mental impairment that restricts day-to-day activities for at least 12 months
(1) claim can be reduced by amounts already claimed for a nursing home or full-time attendant care
CPP and EI Tax Credits
118.7
maximum EI of 15%($1,049) = $157
maximum CPP of 15%($3,218) = $483
an additional $838 of CPP is a Subdivision E writedown
Education Related Tax Credits
118.5(1) to 118.5(4) and 118.62
tax credit for
15% of qualifying tution fees owing in a calendar year, and
15% of interest paid in student loans ofn the year or preceding five years
Medical Expense Tax Credit
118.2(1)
tax credit for A * [(B - C) + D]
where
A is 15%
B is taxpayer’s total medical expense and their spouse and children under 18
C is the lesser of 3% of NITP and $2,759
D is E - F
where
E is medical expense for dependant over 18
F is lesser of 3% of dependant’s NITP or $2,759
- (B - C) cannot be negative
- D can be calculated for multiple dependents
- expense can be claimed for any 12-month period ending in the taxation year
