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CFP Canada 2021 > Tax Planning > Flashcards

Tax Planning Flashcards

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CFP® flashcards
1
Q

Capital Dividend Account

A

Pays tax-free dividends

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2
Q

Cumulative Net Investment Loss

A
  • Prevents access to LCGE

- Can be offset by receiving eligible (38% gross up) or non-eligible (15% gross up)dividends

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3
Q

General Rate Income Pool

A
  • Can pay out eligible dividends
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4
Q

Alternative Minimum Tax

A
  • Arises when claiming LCGE, deductions or tax credits

- Can be carried forward to offset tax in future years

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5
Q

Deduction for workspace in home (Self-Employed)

A
  • 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
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6
Q

Deduction for workspace in home (Employee)

A
  • professional dues
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7
Q

Deduction for workspace in home (Commissioned Employee)

A
  • home maintenance
  • home insurance
  • property tax
  • rent
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8
Q

How can executor use taxpayer’s RRSP room to reduce taxes on terminal tax return

A

if taxpayer has a spouse, can elect to make post-mortem contribution to spousal RRSP

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9
Q

When is there a recapture of CCA

A

When sale price > UCC
cost - UCC = recapture of CCA
sale price - cost = capital gains

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10
Q

When is there a terminal loss upon selling depreciable assets?

A

When sale price < UCC

sale price - UCC = terminal loss

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11
Q

Marginal Tax Rate

A
  • for next dollar of taxable income

- next dollar of allowable income tax deductions

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12
Q

Effective Tax Rate

A
  • applies to income or deductions you are considering

- used for investment returns

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13
Q

Spousal Support lump sum payment for arrears taxable and deductible rules

A
  • taxable to spouse

- tax deductible to payer

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14
Q

Legal fees to establish right to child support tax deductible?

A

yes

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15
Q

Tuition tax credits are refundable credits

A

false

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16
Q

T or F Tuition tax credit be used by spouse to claim

A

true

17
Q

T or F Tuition tax credit be used by supporting parent to claim?

A

true

18
Q

T or F Tuition tax credit cannot be carried forward to future years

A

false

19
Q

Taxpayer can claim medical expenses for:

A
  • taxpayer
  • their spouse
  • dependants including grandchildren
  • relatives living in Canada that receive support
20
Q

Medical expenses can be claimed in which period?

A

any given 12 months period ending in the year that were not claimed in the prior year

21
Q

Medical expenses can be claimed if medical treatment received how far away?

A
  • 40km, can claim cost of travel

- 80km, can claim meals and accommodation in addition

22
Q

2 methods to calculate medical expenses claimed (travel to receive treatment)

A

simple method (used prescribed rate)& detailed method

23
Q

Allowable Business Investment Loss carried forward and back?

A
  • back 3 years forward 10 years
24
Q

ABIL can deduct income from

A

all sources

25
Q

What type of tax rate applies to ABIL

A

effective tax rate

26
Q

Child care tax deduction amounts

A

$8,000 for under age 7
$5,000 for ages 7 ~ 16
$11,000 for disabled (DTC)

27
Q

Effective Tax Rate formula

A

Total tax / taxable income

28
Q

How can executor apply taxpayer’s unused net capital losses carried forward in year of death?

A

can be claimed against any source of taxable income for the year of death and year preceding

29
Q

CNIL offset calculation for reducing surplus with non-eligible dividends

A

grossed up 15% amount must equal to CNIL amount

30
Q

How much CCA can you deduct in the first year?

A

50%

31
Q

CNIL is offset by after tax or before tax amount of non eligible dividends?

A

after tax

CFP Canada 2021 (7 decks)

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