Tax Planning Flashcards
When do returns for the deceased need to be filed?
If died Jan 1 - Oct 31 - April 30th following year
If died Nov 1 - Dec 31 - Six months after the date of death
If deceased or deceased spouse is self-employed:
If died Jan 1 - Dec 15 - June 15th following year
If died Dec 15 - Dec 31 - Six months after the date of death
When do you have to pay instalment taxes?
If you net tax owing is greater than $3,000 in 2016. You do not have to pay if your net tax owing will be less than $3,000 - even if you received an installment reminder.
What are the options for paying installment taxes?
- No Calculation - pay what the CRA calculates - good when you income is consistent. Based on income in two prior years. 2. Prior year option 3. Current year option
What are the political tax contributions?
on first $400 - 75% on next $350 - 50% on next $525 - 33.33%
What income is used to calculate certain federal and provincial non-refundable tax credits
Net income
What deductions from net income calculate taxable income>
capital gains net capital losses of other years non-capital losses of other years security options deductions limited partnership losses of other years
what are the federal tax rates and brackets?
0 - 11,474 - personal exemption 11,474 - 45,282 - 15% 45,283 - 90,563 - 20.5% 90,534 - 140,388 - 26% 140,389 - 200,000 - 29% 201,000 + - 33%
What is the carry forward/carry back of capital losses?
Back 3 years, forward forever
What are the superficial loss rules?
deny any capital loss if you or spouse sold and reacquire shares within 30 days
What is the carry forward of business losses
can be deducted in the year they incurred or carried forward 10 years or back 3 years can be deducted from other types of income, including employment income
How do ABILs work?
Can be deducted from ordinary income in the year it is recognized. if it exceeds taxpayers income for the year, the excess will be treated as a non-capital loss and can be carried forward 10 years or back 3 years
What actions will trigger a deemed disposition for tax purposes?
- Personal residence to income producing property 2. Transfer of property to personal trust (not spousal trust) 3. Transfer of principal residence to a spouse 4. No longer a resident of Canada 5. Death of a taxpayer
What are attribution rules?
When property (including money) is gifted to a spouse, income or loss from property and any capital gain or loss on the disposition will be attributed back. For children (under 18) and grandchildren (under 18), only income is attributed back.
What are the exceptions to attribution rules?
- Transfer property at FMV and report resulting gain. 2. Charge and report interest on the loan. Interest must be at least the CRA’s prescribed rate - and must be paid in each year or by January 30th of following year. (If January 30th deadline passes - that year’s income and all future income from the loaned property will be attributed back to the lender).
How are stock options taxed when granted if a CCPC?
No tax until employee disposes the shares (provided the employee is not related to the controlling shareholders of the company).
How are stock options taxed when granted from a public company?
Options exercised prior to Feb 28, 2000 - differnce between grant and exercise price taxed as employment income in year of exercise Options exercised after Feb 29, 2000 -Employees do not have to pay tax until they actually sell their shares (subject to $100,000 vesting limit) as long as they do own more than 10% of the shares of any class or related to corporation.
What is an RCA?
Retirement Compensation Arrangement - premium pension plan, it allows for large contributions relative to other retirement plans. Cannot be related to corporation.
