Employment and Business
Taxable or not taxable?
Counselling services related to the retirement of the employee.
What is not taxable.
The three main types of property income
What is interest, dividends and rental.
Three items which are classified as LPP
What is (any 3 of)
Work of art
Jewellery
Rare book
Stamp
Coin
The amount of time that non-capital losses may be carried forward and used against other income.
What is 20 years
The PST rate in BC?
What is 7%
Deductible or not deductible
Advertising expenses paid to NBC station direct at Vancouver, BC taxpayers.
What is not deductible (would be deductible if aimed at US markets).
TRUE or FALSE?
Investment counsel fees may be deducted from property income
What is TRUE
Calculate the capital loss
ACB $7,300
POD $6,500
What is $800
6,500 - 7,300
The amount of income that qualifies for the pension tax credit.
What is the first $2,000 of pension income
(not including CPP and OAS)
TRUE or FALSE
A doctor may get a refund for his ITCs paid as medical services are exempt from GST.
What is false
Exempt =no ITCs
Zero rated = ITCs
The length of time a salary can remain unpaid before the employer is not allowed the deduction.
What is 180 days after the end of its taxation year.
Calculate total property income for Joe Smith (all in CAD$)
Interest from a Canadian bank $500
Dividends from CIBC $1,000
Gross dividends from Apple $800
What is $2,680
500 + 1000 + 380 + 800
Calculate the taxable capital gain
ACB $5,000
Selling expenses $2,000
POD $7,500
What is $250
(7500-5000-2000) x 50%
Calculate the medical expenses tax credit:
NIFTP = $95,000
Medical expenses = $3,421
What is $150
(3,421 - 2,421 (maximum))*15%
Calculate net tax using the regular method (yearly filer)
Total sales including GST = 105,000
Expenses not including GST and PST (all amounts subject to both) = 45,000
Capital purchase including GST and PST = 1,120
What is $2,700
GST collected 5,000
Less ITCs paid 46,000 x .05 = 2,300
Calculate the amount of allowable deduction for Pat.
Paid themself a salary of $40,000
Paid an arms-length employee a salary of $30,000 for office work
Paid their spouse a salary of $55,000 for the same type of office work as the employee
Paid their 4 year old child a salary of $15,000 for office work
What is $60,000?
Cannot pay self salary
Cannot pay spouse more than employee for same work
Cannot pay 4 year old for office work
Calculate property income
Rental income before CCA building A: $1,500
Rental loss after CCA building B: $900
CCA on building A $5,000
CCA on building B $4,000
What is 600
CCA may only be used to bring total of all rental losses to zero. Will need to adjust CCA on to $600.
Calculate the amount included in income
Building
ACB 50,000
UCC 45,000
POD 90,000
What is $25,000
(90000-50000) x 50% + (50,000-45,000 )
Sarah calculated $20,000 for her gross tax payable. How much income did she earn during the year?
What is $108,032
20,000 - 17,402 = 2,598
2,598 / .26 = 9,992
9,992 + 98,040 = 108,032
Calculate net tax using the quick method (rate 3.6%) (yearly filer)
Total sales including GST = 105,000
Expenses not including GST and PST (all amounts subject to both) = 45,000
Capital purchase including GST and PST = 1,120
What is $3,430
GST collected 105,000 x 3.6%
Less ITCs paid on capital $50
and 1% of first $30,000
Calculate the total to be included in income
Original cost of vehicle $20,000
Operating costs $5,000
KM Driven = 16,000 personal; 14,000 business
What is $9,120
20,000 x .02 x 12 + 16,000 x .27
Calculate total property income for Jane Smith
Interest from a Canadian bank $500
Dividends from CIBC $1,000
Stock dividends from a CCPC $800
Royalties from book she wrote $700
What is $2,800
500 + 1000 + 380 + 800 + 120
royalties from own work are business income
Calculate the amount included in income
Building
ACB 80,000
UCC 45,000
POD 70,000
What is 25,000 (recapture)
Capital loss not permitted on depreciable property.
Calculate net federal income tax payable:
Terri is 66 years old and has the following income
CPP $7,800
OAS $6,850
RRSP $3,871
RPP $5,000
What is zero
Tax payable 23,521 x 15% = $3,528.15
Less (basic tax credit $13,808 +Age tax credit $7,713 + Pension tax credit 2,000) x 15% = 3,528.15
Calculate net tax using the simplified method (yearly filer)
Total sales including GST = 105,000
Expenses not including GST and PST (all amounts subject to both) = 45,000
Capital purchase including GST and PST = 1,120
What is $2,546.67
GST collected 5,000
Less ITCs paid 46,000* x 1.12 x 5/105 = 2453.33
(45,000+1120/1.12)