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70 Cards in this Set
- Front
- Back
- 3rd side (hint)
What are the three steps for calculating childcare deductions?
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1. Calculate lower spouse's deductions 2. Calculate higher spouse's deductions 3. Lower spouse deduction - higher spouse deduction |
Lower: annual, actual, 2/3 EA Higher: Ann., Act., 2/3 EA, Periodic [Annual x 2.5% X # wks] |
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What are the annual cost limits for childcare deductions?
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- $8000 for child 0-6 - $5000 for child 7+ - $11000 for severely disabled child |
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Name some examples of PUPs
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Furniture, boats, cars, vacation homes
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These are things that won't typically gain value over the years
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Name some examples of LPPs
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Coin collection, stamps, art, jewelry, rare things
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These things will typically increase in value over the years
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What is the Floor Rule?
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Applied to PUPs and LPPS, Proceeds of Disposition and Adjusted Cost Bases must be minimum $1000
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What is the calculation process for RSP Deductions?
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Find the lesser of: * Actual contribution dollars * Government limit: $25,370 - pension adjustment + unused room * EA: (18% * Earned Income) - Pension Adjustment + Unused Room |
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How long can a taxpayer carry forward NET capital assets?
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FOREVER :)
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True or False: Personal Use Property can be carried forward 3 years
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False! There is no carry forward OR backward for PUPs
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An employee is given a loan of $100,000 on February 15. The CRA's prescribed rate is 3%, and the employee's rate is 2%. What is the employee's interest benefit?
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100,000 * (3%-2%) * (319/365 days) $873.98 |
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What is the class number and depreciation percentage for software?
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Class 50, 55%
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Define the calculation for calculating bond interest for corporations. |
Principle x interest x days outstanding |
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How is the Employer's portion of life insurance premiums credited? |
The employer's portion is a taxable benefit, so would be noted as extra income |
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If a taxpayer is driving an employer-leased vehicle, how is the standby cost calculated? |
2/3 x least cost/month x months available to employee |
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Rental income is calculated as: |
Rental revenue - rental expenses (I.e., maintenance, property tax) = rental income - CCA = net rental income |
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What is the tax credit distribution for donating to Politics? |
First $400 = 75% Next $300 = 50% Next $525 = 33.3%
Total = $650 |
First 400$ = 75% (2 more subsequent brackets) |
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What is the tax credit distribution for charitable donations? |
15% of first $200 29% of additional donations |
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How does one calculate straightline deductions in capital allowance? |
ccc |
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What are the guidelines for Class 10.1 assets? |
ddd |
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What is the rule regarding deducting expenses from commission when calculating income? |
if expenses are greater than earned commission, then the taxpayer is unable to claim commission as income |
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Describe the differentiating factors between the Caregiver Credit and the Infirm Dependent Credit. |
Caregiver - Parents/grandparents do NOT have to be infirmed if +65 years old. Caregiver - Provides in-home care for certain adults Infirm Dependent - Dependent does NOT have to live with the taxpayer (i.e., can live in a facility) |
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What is the Family Caregiver Amount? |
$2093 *can be added to spousal, eligible dependent, caregiver, and infirm dependent tax credit
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Provide some examples of deductible expenses for home work spaces. |
Any of the below operating/maintenance expenses: *Mortgage interest *Rent *Property Taxes *Business phone line |
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If a home work space occupies 300 square feet of a 1200 square foot home, what percentage of expenses can be deducted? |
25% The taxpayer can only deduct the portion of space that is occupied strictly for work. |
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What is the calculation for the exempt portion of a principal residence gain? |
Capital Gain X (1+# of years designated PR) / # of years owned |
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When a person owns ONE residence, the gain will _________; In a situation where more than one residence is owned, the taxpayer may designate _______ home(s) as the principal residence(s). |
always be full exempt; ONE |
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In calculating childcare deductions, the parents will claim the lesser of these amounts: |
1. Actual amounts spent (remember special rules for camps); 2. Annual limits; 3. 2/3 Earned Income (EA) 4. **For HEA Parent only** Annual limit x 2.5% x number of wks LEA parent unavailable disposed |
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What is the process individuals must use for reporting interest income? |
Individuals will use a blend of accrual and cash methods |
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What is the maximum amount of time that may be claimed for food/lodging when calculating moving expenses? |
15 days |
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Property income is comprised of |
Interest Dividend And rental income |
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True or False: Legal fees are deductible |
True! Subtract them when calculating Div B. |
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True or False: Spousal and child support are taxable income |
False Only spousal support can be credited as taxable income; child support is non-taxable, and would not be recorded. |
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Which 3 tax credits should be included as soon as we find out someone's employed? |
1. CPP 2. EI 3. Employment Credit (lesser of employment income or $1161) |
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What is the maximum EI tax credit? |
$955 |
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What is the maximum CPP tax credit? |
$2544 |
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What is the Child fitness credit? |
Max. $500 |
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What is the Caregiver Tax Credit? |
$4,667 |
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What are two important steps to remember when calculating tax rates? |
1. Start by finding the taxable income closest to the amount in column A of the Tax Rate chart, calculate the corresponding tax percentage
2. Multiply the excess by the next highest marginal rate
Add the two numbers together for Gross Federal Tax |
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What is the Disability Tax Credit? |
$8001. |
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What is the child supplement for the Disability Tax Credit? |
$4667. Add to the $8001 of the Disability Tax Credit |
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Business Revenue is comprised of: |
All sales sold and receivable; Previously written-off bad debts that are connected |
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Business Income is ___% taxable, while Capital Gains are ___% taxable. |
100%, 50% |
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Business Income is ___% taxable, while Capital Gains are ___% taxable. |
100%, 50% |
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To calculate Gross Profit when calculating Business Income, we: |
-Calculate Revenue -subtract --COGS --Expenses --CCA
= Net Income for Tax Purposes |
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Exemptions from Business Income include: |
- personal expenses - charitable/political donations - salaries/wages paid to self - life insurance premiums (unless business-required) |
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What turns Div B income into Div C income? |
The reduction of loss cfwds from Net Income. |
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Remember to include _____ carry-forward when calculating Div B income; ____ and ______ will be used after to calculate Div C income. |
LPP
Net/Non Capital |
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True or False: Net Capital Loss cfwd should always be calculated first |
True! Net capital loss can only be used against Taxable Capital Gains. |
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Non-capital losses are made up of: |
Losses from employment, property, and business |
Applicable to any income |
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Non Capital Loss can be claimed on income, so long as: |
A) the losses do not exceed the year's income; B) the cfwd is within 20 years; C) the carryback is within 3 years |
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If Mr. X has a taxable income of $62,000, what is his Gross Federal Tax? |
1. Calculate closest excess point; $45282 tax = $6792 2. Calculate excess $$$ 62000-45282 = 16718 3. Calculate the marginal rate on the excess $$$ 16718*20.5% = 3427 4. Add together the federal tax and marginal rate 6792+3427 = 10219 |
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The maximum amount of tuition/textbook/education credit that can be transferred to a parent, spouse, or grandparent is: |
$5,000 |
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What is the age requirement for the Age Credit, and what is the amount? When is the credit eliminated? |
Canadian residents aged 65+; Credit = $7,125 Eliminated when net income exceeds $83,427 |
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Corporations not not allow the following deductions: |
- Charitable/political contributions - life insurance premiums (unless required for collateral) - membership fees for dining/sport/Rec facilities - foreign print/broadcast directed to Canadian markets (ie., American publication targeted at Cdns) |
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What are the questions to ask when a disposal or sale occurs for Corporations? |
1. Did a capital gain/loss occur? 2. Did an accounting loss/gain occur? 3. Did a terminal loss/recapture occur? |
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Appraisal fees are deductible for Corporations only in 1 scenario: |
Deductible if the appraisal is for insurance reasons. |
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Amortization of bond discounts, write-downs on assets, and charitable donations are examples of what should/n't be included in Schedule 1 calculations. |
These should not be included. |
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Amortization of bond discounts, write-downs on assets, and charitable donations are examples of what should/n't be included in Schedule 1 calculations. |
These should not be included. |
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When calculating Corporation's business incomes, we _____ amortization and _______ CCA |
We add back amortization, and we deduct CCA |
Remember: AA |
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When recording CCA disposals, remember to record the _____ of costs and proceeds. |
Lesser |
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CCA is considered recaptured when:
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When UCC is negative prior to claiming CCA
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Terminal Loss occurs in CCA when...
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...There is a remaining balance in a class even after all assets have been sold/disposed of |
Leftovers
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What are class 8 assets?
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comprised of: machinery, equipment, furniture, and fixtures Rate: 20% |
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Traveling costs, food and lodging, and furniture storage are included in...
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Moving expenses!
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Legal expenses and transfer taxes are incurred only when...
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The taxpayer has owned and sold his previous residence (no renters)
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Moving expenses typically break down to four categories:
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1. The costs of selling an old home; 2. Costs of buying the new home; 3. Costs of moving from one location to another 4. Idk |
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Moving expenses that are _____ than income at new job can be carried _____.
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Moving expenses that are greater than income at new job can be carried forward in the following year.
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The dividend tax credit will be calculated by multiplying ___ by ____. |
The Grossed amount by either 15.02% or 10.52% |
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The dividend tax credit will be calculated by multiplying ___ by ____. |
The Grossed amount by either 15.02% or 10.52% |
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The medical expense credit is calculated by: |
15% x (qualifying medical expenses - the lesser of <3% net income or $2237>) |
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What are the weekly limitations on camps/boarding school for childcare deductions? |
200$ for ages 0-6 125$ for ages 7+ 275$ for severely disabled |
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