Chapter 9 Flashcards
252(2)
Brother or Sister
(b/c) a brother or sister of a taxpayer include a person who is
(i) the brother or sister of the taxpayer’s spouse or common-law partner, or
(ii) the spouse or common-law partner of the taxpayer’s brother or sister
251(6)
Blood Relation
a blood relation is where one person is
(a) a child, other descendant, or brother or sister of the other
(b) a spouse or blood relation of the spouse of the other
(c) an adopted child of the other
252(1)
Definition of a child includes
(a) person for whom the taxpayer is the legal parent
(b) person who is or was wholly dependent on the taxpayer while in the taxpayer’s custody and under the age of 19
(c) child of the taxpayer’s spouse
(d) spouse of the taxpayer’s child
73(1)
Inter-Vivos Transfers
transactions between spouses are treated as a tax-free rollover, and the property transferred is deemed to have been disposed of and acquired at an amount equal to
(i) the UCC for depreciable property
(ii) the ACB of the property in any other case
* spouses may opt out of 73(1), otherwise this provision applies regardless of any compensation exchanged
74.1(1)
Attribution for Spouses
74.1(1)
provision that attributes property income back to the transferor (spouse)
74.2(1)
Attribution for Spouses
attributes capital gains/losses back to the transferor (spouse)
63(3)
Definitions for Calculation of Child Care Expenses
63(3) “periodic child care expense amount”
is 1/40 of the annual child car expense amount, which is:
$275/week for a disabled child
$200/week for child under 7
$125/week for child over 7
63(3) “annual child care expense amount”
$5,000 per year for children ages 7-16
$8,000 per year for children under 7
$11,000 per year for chilren who are eligible for the disability tax credit
63(3) “earned income” includes
a. gross employment income
b. employee benefits, as well as scholarships, bursaries and grants
c. net income from business (losses are ignored)
* note that this definition of earned income applies only to section 63 (child care expenses)
63(1)
Child Care Expenses
63(1) an amount may be deducted by the spouse with the lower NITP which is the amount by which the lesser of
a. the amount actually paid for child care (or a prescribed amount for camps)
b. 2/3 of the taxpayer’s “earned income”
c. the sum of the “annual child care expense amount” for each eligible child
EXCEEDS
d. the amount that can be claimed by the higher NITP spouse (see 63(2))
63(2)
Child Care Deduction for Higher NITP Spouse
63(2) the amount that may be deducted by the spouse with higher NITP is the lesser of
1. the three amounts outlined in subsection (1)
2. the amount determined by the formula A * C, where
(A) is the periodic childcare expense amounts
(C) is the total of the number of weeks the supporting person was
a. a student for at least three consecutive weeks spending at least 10 hours per week on studies
b. confined to bed, wheelchair, asylum or hospital for at least two weeks
c. in prison for at least two weeks
56(1)(d)
Annuity Payments
56(1)(d) requires annuities to be included in income; however, a portion of the annuity is repayment of principal, resulting in double taxation; therefore
60(a) allows for a deduction of the capital portion of any annuity payment receiveid so only the interest is taxed
see 248(1) “annuity payments” which defines annuities as an amount payable on a periodic bases (typically investment contracts sold by insurance companies)
60(a)
allows for a deduction of the capital portion of any annuity payment received so that only the interest is taxed
251(1)
Arm’s Length
(a) related persons shall be deemed not to deal with each other at arm’s length
251(2)
Related Persons
see 251(2) for a definition of related persons that are corporations or individuals
69(1)
Inadequate Consideration
69(1)
(a) for acquisitions not at arm’s length in excess of FMV, the taxpayer shall be deemed to have acquired the property at FMV (actual price is seller’s POD)
(b) where a taxpayer has disposed of anything as a gift or non-arm’s length transaction, the taxpayer is deemed to have received POD equal to FMV
(c) ACB for recipient of goods under FMV is the price paid, or FMV if it is a gift
* examinable on non-depreciable property only
13(7)(e)
Non-Arm’s Length Transfer of Depreciable Assets
13(7)(e)
where the taxpayer acquired depreciable property which was capital property of the transferor
(i)
where the cost of the property exceeds the CC to the transferor, the CC to the buyer is deemed to be the total of
(A)
the CC to the transferor and
(B)
1/2 of the amount by which POD to the transferor exceeds his CC
* note that the ACB for the buyer will be the amount actually paid for the asset
13(7)(e)(iii)
if an asset is transferred to a non-arm’s length party at FMV which is less than ACB, the buyer’s UCC will be the FMV, but their ACB and CC will be the original ACB of the seller
74.5(1)
Opting Out of 73(1)
74.5(1)
for attribution rules not to apply the taxpayer must:
opt out of 73(1) when filing their tax returns for the year of the transfer (the transfer is then governed by s. 69)
AND
have the transferee spouse pay at least FMV for the asse from his/her own source of funds
74.1(2)
Attribution for Non-Arm’s Length Minors
74.1(2) transfers that have occurred to a non-arm’s length minor, or a niece or nephew of the transferor, where the niece or nephew is a minor, results in the attribution of any property income back to the transferor (but not capital gains), until the minor reaches the age of 18
* don’t forget to gross up attributed dividends
56(1)(a)
Pension Benefits
56(1)(a)
pension benefits must be included in Subdivision D income [under 3(a)]
there are opportunities for spouses to split income to reduce taxes
taxpayers file an election as to how much income thy wish to report on their spouse’s return
56(1)(b)
Spousal Support
56(1)(b)
spousal support must be included in income, less any child support that came as part of the support payment in Subdiv D income
60(b)
the payer of spousal support receives a Subdiv E deduction, less any child support that was part of a combined support payment
* child support is neither taxable nor deductible
60(b)
60(b)
the payer of spousal support receives a Subdiv E deduction, less any child support that was part of a combined support payment
* child support is neither taxable nor deductible
62(1)
Moving Expenses
62(1)
the taxpayer may deduct moving expenses against employment/business income or scholarships and grants for education related to the move; a moving allowance, if received, must be included in income to deduct travel expenses
see also
62(3) Definition of a “moving expense”
248(1) “eligible relocation”
62(3)
62(3) Definition of a “moving expense”
248(1) “eligible relocation”
