Taxation

Question 1

What is a deemed resident of Canada?

Answer 1

Someone who has spent at least 183 days in Canada in one calendar year. Taxed in Canada for full calendar year on worldwide income.

Question 2

List the division see deductions for personal income taxes:

Answer 2

Employee stock options
Deductions for payments to GIS, welfare, WSIB
Home relocation Loan
Loss carryover’s
Lifetime capital gains deduction
Northern residence

Question 3

List non-refundable federal tax credits at 15% For personal taxation:

Answer 3

Basic personal amount
Age amount
Spouse amount
Medical expenses
Homebuyer
Tuition, education, textbook

Question 4

List other non-refundable tax credits For personal taxation:

Answer 4

Donation
Dividend tax credit
Foreign business and non-business income
Political contribution

Question 5

List the refundable tax credits for personal income tax:

Answer 5

Working tax benefit
Refundable medical expense supplement
HST credit
Canada child benefit
Clawbacks

Question 6

Dispositions are deducted at what amount?

Answer 6

Lesser of cost and proceeds of disposition

Question 7

Definition of paid up capital (PUC)

Answer 7

Paid up capital is the legal stated capital for shares and is the average per class of shares so all shareholders will have same page of capital per share.

Question 8

How can paid up capital be returned to the shareholders and a tax-free basis?

Answer 8

By a paid up capital reduction
By a redemption of shares
By a wind up of the corporation

Question 9

What is a paid up capital reduction

Answer 9

Private corporation reduces the paid up capital and pays out to shareholder. As long as amount is equal to or less than paid up capital amount is tax free. Anything over that amount is a deemed dividend. This will reduce paid up capital per share and also reduces the ACB per share.