Unit 4 Flashcards
summary of federal tax calc
Gross federal tax
-Determine federal tax before credit by applying federal tax rates to TI
rates vary from 15%-33%
Nonrefundable tax credits
-Credits cannot be used in the CY do not form the basis of the refund
-Cant be CF with the exception of tuition, donation, student loans
-Credits are a direct reduction in tax payable
base of credit is multiplied by 15% to determine the reduction in tp
Common credits
Common credits P2
-Interest on student loans: credit base= inters paid in the yr or preceding 5 yrs (if no credit was claimed)-> no maximum
-Tuition: credit base=amount, trf to spouse parent up to $5K, more than $100
EI RTC
- Credit base/req payments: $60,300 * 1.58%
- Lesser of earnings & 60,300
CPP amounts
- Credit base=(Earning-3,500)*4.95%
- Maximum=$3,039
-Req payments= ($64,900-3,500)*5.70%
Lower of actual income & 64,900
Medical RTC
Amount paid in the yr
Less: lesser of
a) Maximum credit 3% of NI ceiling
b) 3% of taxpayer NI
Donation tax credit - Taken after RTC
-Eligible Canadian charities, governments, and certain charitable paths outside of Canada
-Credit base= lesser of donation amount and 75% of net income
-Unused credits can be CF up to 5 yrs
Federal political contributions-Taken after RTC
Dividend tax credit taken after RTC
-Eligible=6/11 of 38% GU
-Non eligible 9/13 of 15% of GU
Refundable tax credits
-Paid regardless of federal tax payable
Clawbacks and tax payable (refundable)
-OAS clawback when NI> $81,761
-EI clawback when NI>73,375
-When repayment is requied its deducted from NI and added to TP
-When self-employed individual made CPP cont the entire amount (2(pensionable earning-$3.5K)5.70%) is added back at this point
Calc federal tax payable
-Net federal tax calc by aggregating all the above balances
-Gross federal tax payable less non refundable tax credits before considering withholdings and installments cant be negative
Division C deductions-loss CF
-farm losses
-ABIL