Tax- Other income (personal)

Question 1

Other income

Answer 1

• Retirement: RPP, DPSP, RRSP, RRIF, annuities, CPP, retiring allowances, OAS
• Scholarships, bursaries and fellowships
• Death benefits (greater than $10,000)
• EI benefits
• Research grants net of expenses
• Spousal and child support

Question 2

Pension income splitting

Answer 2

• can allocate up to 50% to spouse and allows for additional $300 in federal pension credit for spouse
• when transferring, consider:
  1) tax rates of transferor and spouse (if spouse tax rate is lower it will be better to transfer to lower rate)
  2) availability of pension tax credit to spouse (if the spouse has no pension income, the credit will be available to both persons)
  3) impact on OAS clawback
  4) impact on allocation of tax credits

Question 3

RESP and RDSP

Answer 3

• contributions are not deductible and therefore the funds are not taxable
• however, the accumulated income in the plan is taxable when with drawn

Question 4

Annuity

Answer 4

• full amount included in income
• deduction = (amount paid to acquire annuity / total payments received) x (annuity payment)

Question 5

Can CPP income be split between spouses

Answer 5

• Yes

Question 6

Retiring allowance

Answer 6

• amount that can be transferred on a tax free basis to an RRSP is the lesser of:
  1) $2,000 for each year (or partial year) where employed before 1996 + $1500 for each year prior to 1989 where contributions RPP or DPSP had not vested
  2) amount of the retiring allowance received in the year

Question 7

Division C Income and Deductions

Answer 7

• Welfare
• Workers comp
• Guaranteed Income Supplement

Question 8

Indirect payments

Answer 8

• include in income of transferor
• ex: father requests to have part of his income transferred to his son, which benefits the father because he is saving tax

Question 9

Child Support

Answer 9

• not deductible to payer
• not taxable to recipient

Question 10

Spousal Support: Deductible/taxable if…

Answer 10

• payments are periodic
• payments are for maintenance of recipient
• payments made while living apart
• payments in written agreement or order of tribunal
• recipient has discretionary use of funds

Question 11

Spousal Support: Other considerations

Answer 11

• spousal support only taxable/deductible if full amount of child support is paid first
• payments must be defined in agreement - and if not only child support will be considered
• third party payments will be deductible if meet criteria