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Financial Accounting > Tax > Flashcards

Tax Flashcards

1
Q

Other Deductions - Childcare Expenses - Who can deduct

A

Lower Income Spouse

Unless lower income spouse is:

  1. In FT or PT education
  2. Confined to prison for at least 2 weeks
  3. Infirmed or incapable of caring for children for 2 weeks
    - living apart from higher-income earner for at least 90 days and child resides with HIE
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2
Q

Other Deductions - Childcare Expenses - Limitations

A

All limited to 2/3 taxpayers income

Under 7 - no disabilities

  • max 8,000$/ child
  • 200$/ week camps/ higher income

7-16 - no disabilities

  • max 5,000$/child
  • 125$/ week camps higher income

16 over, disability, does not qualify

  • max 5,000$/ child
  • 125$/ week

Any Age - Disability, qualifies

  • 11,000$/ child
  • 275$/ week
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3
Q

Other Income - Moving Expenses

A
  1. Earn business or employment income
  2. Attend qualified post-secondary institution

Conditions

  • At least 40km closer
  • Expenses that exceed income can be carried forward
  • Expenses must be paid (not reimbursed)
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4
Q

Other Deductions - Moving Expenses - Qualified

A
  • Traveling Costs
  • Transportation/ Storage Costs
  • Cost of Meals and Accommodations up to 15 days
  • Selling costs of old residence
  • Legal Fees and Title Transfer of new home (But not if old home was rented)
  • Does not include house hunting
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5
Q

Other Income - Childcare expenses - Calculation

A

Lesser of

  • Amount Paid
  • Limit
  • 2/3 Income

If Lower Income is exempt for a period - calculate for the High-income Earner (Limit = / week rate) and deduct from lower income deduction

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6
Q

Employee vs Contractor - Main Tests

A
  1. Control
  2. Ownership of Tools
  3. Economic - Chance of Profit/ Risk of Loss
  4. Integration in the organization
  5. Intent of the relationship
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7
Q

Tax Return filing Dates

A

Employee - April 30

Contractor - June 15

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8
Q

Employment Income

A
  • Salary, Wage, Gratuities
  • Bonuses, tips, commissions
  • Employee Benefits (incl automobile, stock options)
  • Limited Deductions
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9
Q

Business Income (loss)

A
  • Profit (Revenue less expenses incurred to earn income)

- Profession, calling, trade, manufacturer, adventure, or concern in nature of trade

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10
Q

Property Income (loss)

A
  • Interest Income
  • Dividend Income
  • Rental Income/ Loss
  • Royalty Income
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11
Q

Other Income

A
  • Retirement income (pensions, RRSP, CPP)
  • Spousal support
  • Social assistance
  • Workers Compensation

Deductions

  • Spousal payments
  • moving expenses
  • childcare support
  • RRSP Contributions
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12
Q

Capital Gains (losses)

A
  • Proceeds of disposition less adjusted cost base

- 50% inclusion rate

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13
Q

Deferred Income Plans - RRSP

A
  • Contribution is deductible
  • Earnings not taxed while in plan

Limits
- 18% previous year earned income
and current year deduction limit (26,230)

  • Contribution room is not regained after withdrawl except with buy plan or lifelong learning plan
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14
Q

RRSP - Pension Adjustment

A

Past service reduces deduction limit

Reversal increases deduction limit

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15
Q

Deferred Income Plans - TFSA

A
  • Contribution not deductible
  • Earnings not taxed
  • Limits = 5,500/ year
  • Contribution room recovered at start of calendar year after withdrawl
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16
Q

Deferred Income - RESP

A
  • Contribution not deductible
  • Not taxed while in plan
  • Lifetime limit = 50,000 per beneficiary

Gov grants up to 20% of contributions max 500$ in a year until child turns 17

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17
Q

RRSP - Home buyers movie

A
  • must be for a home
  • Cannot have owned a home for prior 4 calendar years
  • repayment over 15 years
18
Q

RRSP - Lifelong Learning

A
  • Designated institution
  • Individual or spouse can withdrawl
  • 10,000 per year max 20,000
  • repayment over 10 years starting in 5th year unless withdraw from school earlier
19
Q

Taxes - Residency

A

Residents - Taxed on worldwide income for the year

Part-year Resident - taxed on worldwide income for part of the year

Non-resident - taxed on Canadian source income

20
Q

Taxes - Residency - Determining criteria for individuals

A

Primary

  1. Dwelling place in Canada is maintained
  2. Spouse in Canada
  3. Dependents in Canada

Secondary

  1. Personal Property kept in Canada
  2. Social or Other Ties
  3. Economic Ties
21
Q

Taxes - Residency - Sojourning

A

Not factually a resident but in Canada for more than 182 days (at least 183 days)

22
Q

Taxes - Residency - Sojourning

A

Central management and Control where board meets to make decisions

23
Q

Tax Administration - Filing Dates

A

Individual

  • April 30
  • June 15 - taxpayer of spouse carries a business (not self employed)

Corporation
- 6 months after year end

24
Q

Tax Administration - Filing Dates - Deceased

A

Later of

1) regular deadline
2) 6 months after date of death

25
Q

Tax Admin - Notice of Assessment - Appeal Dates

A

File an objection within 90 days of deadline

1 year from tax return filing deadline

26
Q

Tax Admin - Calculate Tax Installments

A

Lower of

  1. 1/4 * current year
  2. 1/4 * immediate prior
  3. 1/4 * second prior
  4. 1/2 (immediate prior - 2* second prior)
for corporation
1/2
1/2
1/2
 1/10
27
Q

Employment Income - Home Office Expense

A

Can only be used to reduce business income, not employment income

28
Q

Employment Income - Meals & Entertainment

A

Cannot reduce employment income unless individual receives commissions

29
Q

Employment Income - Stock Options - CCPC

A

No taxable benefit on purchase if company is a CCPC

Benefits on purchase are recognized when shares are sold

30
Q

Property Income - Claiming CCA

A

Lower of:

  1. UCC * CAA rate (4% for buildings
  2. Gain from Rev-Exp

Cannot have a loss from rental property

31
Q

Interest & Penalties - Missed Payment Deadline

A

Interest Rate + 4%

Compounded daily from May 1 until amount is paid

32
Q

Interest & Penalties - Failure to file return

A

First Time:
5% * total unpaid
1% * total unpaid * no. months outstanding (no more than 12)

Subsequent
10% * unpaid
2% * total unpaid *no. months outstanding (no more than 12)

33
Q

Interest & Penalties - False Statement and Omissions

A

greater of
100%
50% understated tax

34
Q

Interest & Penalties - Misrepresentation

A

Greater of
1,000$
50% tax sought to be avoided

35
Q

What is CCA

A

Annual deduction for the cost of appreciable capital assets used to earn income is allowed for tax purposes

  • Cannot be claimed until asset is available for use
36
Q

UCC Calculation

A 
Beginning UCC
\+ Additions
- Disposals
- 1/2 Year Rule
= Base for CCA
- CCA Claimed
\+ 1/2 Year Rule
= UCC Balance

Where
Disposals = lesser of proceeds - cost and original cost
1/2 year rule = if Additions > disposals

37
Q

Why do we use Recapture/ Terminal Loss

A

Over time deducts no more or less than net out-of-pocket costs for the asset

Recapture = Additions < Disposals
-ve UCC balance
Claimed too much CCA

Terminal Loss = Additions > Disposals
\+ve UCC Balance
Ddid not claim emough
deducted from UCC to arrive at nil balance
deducted from Net Income
38
Q

CCA - Limited-Life Intangibles

A

Trademarks/ Licences
Acquisition = (cost/legal life) * (days remaining/ total days)
Subsequent = cost/ legal life

39
Q

CCA - Sale of land and building

A

Terminal Loss > Capital Gain
- Reduce TL and deduct from NI for tax purposes

Capital Gain > Terminal Loss
- reduce CG and include 50% of remaining in net income for tax purposes

40
Q

Personal Div C Deductions

A 
Deductions for 
- Northern residents (6 months)
- lifetime capital gains deduction
- loss carryovers
- Employee Stock Options 
= 50% * # shares * (SP-EP)

Financial Accounting (4 decks)

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