Tax Planning Flashcards
Capital Dividend Account
Pays tax-free dividends
Cumulative Net Investment Loss
- Prevents access to LCGE
- Can be offset by receiving eligible (38% gross up) or non-eligible (15% gross up)dividends
General Rate Income Pool
- Can pay out eligible dividends
Alternative Minimum Tax
- Arises when claiming LCGE, deductions or tax credits
- Can be carried forward to offset tax in future years
Deduction for workspace in home (Self-Employed)
- 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
Deduction for workspace in home (Employee)
- professional dues
Deduction for workspace in home (Commissioned Employee)
- home maintenance
- home insurance
- property tax
- rent
How can executor use taxpayer’s RRSP room to reduce taxes on terminal tax return
if taxpayer has a spouse, can elect to make post-mortem contribution to spousal RRSP
When is there a recapture of CCA
When sale price > UCC
cost - UCC = recapture of CCA
sale price - cost = capital gains
When is there a terminal loss upon selling depreciable assets?
When sale price < UCC
sale price - UCC = terminal loss
Marginal Tax Rate
- for next dollar of taxable income
- next dollar of allowable income tax deductions
Effective Tax Rate
- applies to income or deductions you are considering
- used for investment returns
Spousal Support lump sum payment for arrears taxable and deductible rules
- taxable to spouse
- tax deductible to payer
Legal fees to establish right to child support tax deductible?
yes
Tuition tax credits are refundable credits
false
T or F Tuition tax credit be used by spouse to claim
true
T or F Tuition tax credit be used by supporting parent to claim?
true
T or F Tuition tax credit cannot be carried forward to future years
false
Taxpayer can claim medical expenses for:
- taxpayer
- their spouse
- dependants including grandchildren
- relatives living in Canada that receive support
Medical expenses can be claimed in which period?
any given 12 months period ending in the year that were not claimed in the prior year
Medical expenses can be claimed if medical treatment received how far away?
- 40km, can claim cost of travel
- 80km, can claim meals and accommodation in addition
2 methods to calculate medical expenses claimed (travel to receive treatment)
simple method (used prescribed rate)& detailed method
Allowable Business Investment Loss carried forward and back?
- back 3 years forward 10 years
ABIL can deduct income from
all sources
