Tax planning Flashcards
What is after tax interest rate?
Adjusting interest rate payable by tax deductions or tax credits if available to that type of debt
Expenses for Self employed contractors
50% meals and entertainment, professional dues, work related travel, work cell phone, internet (business use), office supplies, lease of computer/business equipment, tax preparation fee
Home office expenses (based on size of space or # of rooms): mortgage interest, utilities, property taxes, repairs and maintenance, home insurance
expenses for employee working from home (a choice to go into office or work from home but opted to wfh)
professional dues only, no home office expenses
equity ratio
= net worth / total assets
What ways can you reduce the taxable income to below SMABUD level?
- paying out bonuses and salaries
- increasing CCA
- contributions to GRSP or RPP
- Establish deductible benefit program i.e. extended health program
reasons to deduct child care expenses
- to work
- to run a business
- to go back to school (qualifying program & secondary school)
- to conduct research when grant was received
maximum annual childcare expenses:
child under age 7 - $8000
child between age 7- 16 or over 16 with disability but no DTC - $5000
any age with disability claiming DTC - $11,000
What are the deduction rates for child care expense if a lower income spouse goes back to school full time, confined to a bed or is in prison?
under age 7 - $200/week
between age 7- 16 or with disability (no DTC) - $125/week
children with disability (with DTC) - $275/week
What are the deduction rates for child care expense if a lower income spouse goes back to school part time?
child under age 7 - $200/month
child age 7-16 or disabled (no DTC) - $125/month
disabled child (with DTC) $275/month
Transfers from a non-registered account to an RSP with a capital loss, is this a taxable event?
No, capital losses are not allowed during a transfer but capital gains are a taxable event.
Personal use properties, are they allowed to have capital losses upon its sale?
no but for capital gains they are taxable.
When are taxes paid on T-Bills interest earned?
Upon its maturity
When are bonds interest taxed?
when received in the calendar year
Dividend Yield formula
annual dividends per share / current share price
Total dividend to be received formula
(par value x dividend yield ) x # of shares
how many years can the capital gains of a farm property sold to a child be spread over?
10 years
how many years can the capital gain of a sale of any property be spread over?
5 years
Non-Capital loss
a loss from business, employment or property (includes rentals) and unused ABILs
ABILS
Allowable Business Investment Loss
When there’s a disposal of any shares or bonds of a CCPC that causes a loss, a business loss is realized and can be deducted from ordinary income and carry forward 10 years.
CNIL - Capital Net Investment Loss
When borrowing money to invest and deducting the interest as an expense. At the time of sale, you cannot use the full LGCE rule as its only limited to 50% because of the CNIL balance.
Basic personal amount
$13808
LCGE
$892218
Spouse amount
$13808
age amount (65+)
$7713 if income below 38893
eliminated if income exceeds 90313
Disability amount
$8662
Medical expense
$2421 or 3% of net income whichever is less
Primary residence exemption rule
always choose the property with the higher capital gain, add one year to the year of sale in order for the exemption to apply to the whole amount
What gets added to partnership’s ACB?
capital contributions, share of profits, share of capital dividend received and share of resource or exploration and development assistants
what gets deducted to a partner’s ACB?
share of drawings, share of losses, share of investment tax credits, resource or development expenses.
Part IV taxes
when a CCPC receives dividends from a non-related corporation it does not pay taxes on this dividend
UCC calculation
total capital cost - claimed CCA - (lesser of: sale price or capital cost)
CCA calculation
purchase price - UCC price
or
purchase price x CCA % of the asset class
