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Accounting > Tax Elective 3 > Flashcards

Tax Elective 3 Flashcards

1
Q

What should you do before a sale of shares?

A

Pay out CDA and RDTOH

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2
Q

Benefit of Share sale or Asset sale? Goodwill

A

Asset

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3
Q

Benefit of Share sale or Asset sale? LCGE on shares

A

Share

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4
Q

Benefit of Share sale or Asset sale? Carry forwards

A

Share

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5
Q

Benefit of Share sale or Asset sale? No Real Est. Taxes

A

Share

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6
Q

Benefit of Share sale or Asset sale? CG - 1/2 taxable

A

Share

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7
Q

Benefit of Share sale or Asset sale? Bump Asset Values

A

Asset

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8
Q

Benefit of Share sale or Asset sale? No reassess.

A

Asset

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9
Q

Benefit of Share sale or Asset sale? Seller gets losses on assets

A

Asset

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10
Q

Where can infor on Qualified farming property be found?

A

T4003 Farming Income

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11
Q

CNIL is calculated as

A

accumulated investment expenses that have

exceeded investment income

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12
Q

How much does the RRSP limit increase on earned income?

A

18%

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13
Q

What is the maximum RRSP contribution for 2015?

A

24 930

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14
Q

Why mix dividends and salaries?

A

To cover personal tax credits.

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15
Q

What are four good reasons to incorporate?

A

Limited Liability - Tax Reduction

- Tax Deferral - Income Splitting - LCGE - Type of Income - Estate Planning

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16
Q

Who does splitting income not work with?

A

Children

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17
Q

How should one transfer assets to a related party?

A

As a gift or at fair market value.

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18
Q

Why should assets be transferred at FMV to a related party?

A

To avoid double taxation.

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19
Q

What are the POD and ACB of a gift?

A

Fair Market Value

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20
Q

What is the inclusion rate on CEC expenditures?

A

75 percent

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21
Q

What is the allowed deduction for CEC?

A

7 percent per year of balance

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22
Q

What is the implication of corps being related?

A

Transactions are non arms length.

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23
Q

What is the implication of individuals and corps being affiliated?

A

Capital losses are denied (ACB is added to FMV) on transfers

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24
Q

What is the implication of corps being affiliated?

A

Capital losses are denied until disposition occurs by tranferee

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25
Q

What are the terminal loss implications when parties are affiliated?

A

Terminal loss is on hold until disposition to non-affiliated party.

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26
Q

Taxable Capital is:

A

Retained earnings + long term debt + share capital + overdraft

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27
Q

What is a personal service business?

A

Salary or wages earned by a corporation.

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28
Q

When is SPECIFIED INVESTMENT BUSINESS active income?

A

Employs MORE than 5 full time employees (or the work of that
many people is contracted out)

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29
Q

Is personal service business active or passive income?

A

Passive.

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30
Q

When does the SBD get reduced?

A

When taxable capital is greater than $10,000,000

31
Q

What qualifies small business shares?

A

1- Held for 24 months 2- 90% of assets used in active business
(50% in last 24 mos.)

32
Q

What is eligible for the capital gains exemption?

A

QSBS & Qualified Farm & Fishing Property

33
Q

ABIL stands for

A

Allowable Business Investment loss

34
Q

A business investment loss is from:

A

Arms length disposition of Sbshares or owed debt

35
Q

ABIL can reduce which type of income?

A

All

36
Q

ABIL is what percentage of BIL ?

A

50%

37
Q

Carry forward after 2003 for an ABIL is?

A

10 years

38
Q

What happens after an ABIL loss expires?

A

Turned to a net capital loss and carried forward indefinitely.

39
Q

What part of the year must a CCPC be a CCPC to get the SBD?

A

Throughout the year.

40
Q

How many levels of relations are considered related?

A

Immediate and in-laws.

41
Q

What happens to the connecting corp if it opts out of the triangle association?

A

It loses its right to a SBD

42
Q

Implications of related vs. associated?

A

Arms length vs. SBD sharing

43
Q

Election for Canadian Securities

A

Elect dispositions to be treated as capital loss (all in that year)

44
Q

Prescribed Auto Rate

A

55 for first 5000 and 49 after

45
Q

Corp Tax Treatment: Auto above prescr rate?

A

Added back

46
Q

Corp Tax Treatment: Prepaid expenses

A

for next years Services added back

47
Q

Corp Tax Treatment: Club dues & rec facilities

A

Added back

48
Q

Corp Tax Treatment: Bonuses not paid

A

Added back if not paid after 180 days

49
Q

Corp Tax Treatment: Contingencies

A

Added back (eg Warranty & lawsuits)

50
Q

Corp Tax Treatment: Foreign media directed at CDNs

A

Added back

51
Q

Corp Tax Treatment: Life Insurance not as financing collateral

A

Added back

52
Q

Corp Tax Treatment: Bad Debt

A

Direct write off only

53
Q

Corp Tax Treatment: Legal and issue cost of shares

A

1/5 can be deducted

54
Q

Corp Tax Treatment: Unrealized or impairment losses

A

non deductible

55
Q

Corp Tax Treatment: Vacant Land

A

Interest & property taxes only up to Revenue

56
Q

Corp Tax Treatment: Conventions

A

Up to 2 per year (usually)

57
Q

Reserve: Includes what two items

A

Property & Lengthy (instalment) receivables

58
Q

Does the UCC balance ever expire?

A

No

59
Q

Lower of cost and proceeds applies to what?

A

CCA

60
Q

Which classes does the 1/2 yr rule not apply to?

A

Class 14 & 52 & Some 12

61
Q

What is class 12?

A

Tools, utensils, and kitchen items.

62
Q

What is class 14?

A

Franchise fees, license and patents.

63
Q

Class & Rate: Equipment & Furniture

A

8 - 20%

64
Q

Class & Rate: Residential Buildings

A

1 - 4% (separate classes for rentals over 50,000)

65
Q

Class & Rate: Commercial Buildings

A

1 - 10%

66
Q

Class & Rate: Passenger vehicle

A

10 - 30%

67
Q

Class & Rate: Non passenger vehicle

A

10 - 30%

68
Q

Class & Rate: Vehicles over 30k

A

10.1 - 30% (No TL or Recap | 50% CCA final year |Sep Classes)

69
Q

Class & Rate: Leasehold Improvements

A

13 - Straight Line over Lease + 1st Renewal

70
Q

Class & Rate: Franchise Fees

A

14 - Straight line DAYS of useful life

71
Q

Class & Rate: Parking Lot

A

17 - 8%

72
Q

Class 29 & 43?

A

Manufacturing Equipments (30 - 50%)

73
Q

Section 85 - What if an asset’s fmv is less than its tax value

A

then just sell it to the corp at fmv and get the loss.

Accounting (14 decks)

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