Taxation

Question 1

CCA class 1

Answer 1

Buildings acquired after 1987: 4%

Non-residential building: 6% - must be in separate class to get extra 2%

Manufacturing building (at least 90% manufacturing): 10% must be in separate class to get extra 6%

Question 2

CCA class 3

Answer 2

Building acquired prior to 1988: 5%

Question 3

CCA class 8

Answer 3

Furniture and fixtures, office equipment & any equipment not in other CCA class

20%

Question 4

CCA Class 10

Answer 4

Automotive equipment, including passenger vehicles costing up to $30,000 before taxes

Non-passenger vehicles can be more than $30,000

30%

Question 5

CCA class 10.1

Answer 5

Passenger vehicles costing more than $30,000 before tax
Separate class for each vehicle, recapture and terminal loss rules do not apply

30%

Question 6

CCA class 12

Answer 6

Library books, tableware, kitchen utensils costing less than $500, dies, patterns and moulds, medical and dental instruments, tools costing less than $500, linens, feature films, computer software that is NOT systems software.

100%

Half year rule and AIIP only applies to software, patterns and moulds

Question 7

CCA class 13

Answer 7

Leasehold improvements - straight line basis on minimum of 5 years

Period: lease period plus one renewal period

Question 8

CCA class 14

Answer 8

Patents, franchises, concessions or licences with limited legal life

Straight line based on legal life of the asset

Pro-rated for number of days in year of acquisition and qualifies for AIIP

Question 9

CCA class 14.1

Answer 9

Intangible assets acquired after Jan 1, 2017 that aren’t included in class 14 or 44

Includes incorporation costs after the first $3000 (which is deductible as a current expense)

5%

Question 10

CCA class 17

Answer 10

Roads, sidewalks, airplane runways, parking areas

8%

Question 11

CCA class 29

Answer 11

Machinery & equipment used for manufacturing and processing in Canada of goods for sale or lease
Acquired after Mar 18, 2007 and before Jan 28, 2009

50% straight line with 1/2 year rule

Question 12

CCA Class 43

Answer 12

Machinery and equipment used for manufacturing and processing in Canada of goods for sale or lease that aren’t included in class 29

30%

Question 13

CCA class 44

Answer 13

Patents acquired after April 26, 1993

25%

Question 14

CCA class 45

Answer 14

General purpose electronic data processing equipment (computer hardware) and systems software for that equipment acquired between Mar 2004 and Mar 2007

45%

Question 15

CCA class 50

Answer 15

Computer hardware and systems software

55%

Question 16

CCA class 53

Answer 16

Manufacturing and processing equipment acquired after 2015

50%

Question 17

CCA class 54

Answer 17

Zero-emission vehicles acquired after Mar 18, 2019 that would otherwise be included in class 10 or 10.1

30%

Question 18

General implications of death

Answer 18

Deemed disposition of property on death

Terminal tax return filed from Jan 1 in year of death to date of death.

Question 19

Deemed disposition of non-depreciable capital property on death

Answer 19

Possible election out of ITA 70(6)

Spouse beneficiary and ITA 70(6) is NOT elected out of:
- deemed proceeds equal the ACB of the property of deceased
- deemed cost to beneficiary is the ACB of the property
- no tax consequences as result of disposition

Beneficiary is not spouse or is spouse and ITA 70(6) IS elected out of:
- deemed proceeds equal to FMV of property of the deceased
- deemed cost to beneficiary is the FMV of the property
- deceased taxpayer has a deemed capital gain or loss

Question 20

Deemed disposition of depreciable capital property on death

Answer 20

Possible election out of ITA 70(6)

Spouse is beneficiary and ITA 70(6) is NOT elected out of:
- deemed proceeds equal the UCC of property of deceased
- no capital gains, recapture or terminal loss for the deceased
- capital cost to the beneficiary spouse equals the capital cost of deceased
- UCC stays the same

Beneficiary is not spouse or is spouse and ITA 70(6) IS elected out of:
- deemed proceeds equal FV of property of deceased
- UCC to the beneficiary is the FV of the property
- FMV < capital cost - the difference is deemed CCA taken by beneficiary and capital cost remains the same for beneficiary upon subsequent disposal of property
- terminal loss or recapture for deceased and capital gain if FV of property > than original cost

Question 21

Capital losses in year of death

Answer 21

If total allowable capital losses are > than total taxable capital gains, excess can be claimed:
- 1st against any other income in terminal return
- 2nd against deceased person’s tax returns of previous years

Question 22

Unmatured RRIF upon death

Answer 22

RRIF = registered retirement income funds

Beneficiary is spouse:
- named as successor: RRIF payments after death continue to be made to the surviving spouse and are taxed their hands
- Not named as successor but is beneficiary: FMV of RRIF at time of death is taxed in hands of spouse. Spouse May transfer funds to their own RRIF and claim deduction for amt transferred which gives no tax consequences to deceased or spouse

Beneficiary is not spouse:
FMV of RRIF is taxed in terminal return

Question 23

Unmatured RRSP upon death

Answer 23

Beneficiary is spouse:
- FMV of RRSP at time of death is taxed in hands of spouse
- spouse may transfer funds to their own RRSP or RRIF and claim deduction, no tax consequences for deceased or spouse
- spouses contribution limit is not impacted by transfer

Beneficiary is not spouse:
FMV at time of death is taxed in terminal return

Question 24

TFSA upon death

Answer 24

Beneficiary is spouse:
- tax exempt status of TFSA is kept

No beneficiary is named or named beneficiary is not spouse:
- FMV of TFSA become part of deceased’s estate
- no tax consequences for deceased since amount withdrawn from TFSA are tax-free
- if spouse receives TFSA through the estate and not named beneficiary, proceeds may be used to make exempt contribution to spouse’s TFSA if:
-made before end of first calendar year following death
-is designated as exempt contribution in spouse’s tax return

Question 25

“Rights or things” return

Answer 25

Rights or things:
- matured but unclipped bond coupons
- dividends declared before date of death but not received
- salaries, commissions & vacation pay owing for a period prior to death but unpaid at the date of death

3 Treatment options:
- report in terminal return along with other income
- elect to include rights or things in a separate tax return
- report on beneficiaries return if transferred

Due date is later of:
- one year after date of death
- 90 days after assessment of terminal return
- if rights or things are transferred to beneficiaries - reported on beneficiaries tax returns

Benefits of separate rights or things return:
- income could be taxed at a lower rate
- tax credits may be claimed in full on each return

Question 26

Personal tax credits upon death

Answer 26

Can be claimed in full on each return and are not prorated for length of the period:
- basic personal amt
- age amt
- spouse/equivalent to spouse/eligible dependant
- infirm dependant over 17
- caregiver amt
- family caregiver amt for children under 18

All other credits are split between the two returns but can’t exceed amt that could have been claimed if only the terminal return had been filed

Question 27

Charitable donations (personal tax)

Answer 27

75% of net income limitation doesn’t apply for year of death and year preceding death.

Tax credit basis is lesser of:
- amount of donation
- 75% of net income
Amounts above 75% of net income can be carried forward for up to five years

Tax credit = (15% x A) + (33% x B) + (29% x C)
A = 1st $200 of charitable donations
B is lesser of:
- charitable donations less $200
- taxable income less $216,511
C = charitable donations - A - B

Question 28

Medical expense credit (personal tax)

Answer 28

Year of death - claim can be made for medical expenses paid within any 24 month period that includes date of death

Qualifying medical expenses minus lesser of:
- 3% of net income
- $2,421

When claiming medical expenses of a dependant - the 3% of net income is based on the dependants net income

Can be claimed for any 12 month period ending in the taxation year

Question 29

Terminal return deadlines

Answer 29

Taxpayer didn’t carry on a business:
Date of death Jan 1 to Oct 31: Apr 30 of following year
Date of death Nov 1 to Dec 31: Six months after date of death

Taxpayer carried on a business:
Date of death Jan 1 to Dec 15: June 15 of following year - taxes owing still due by Apr 30
Date of death Dec 16 to 31: six months after date of death

Question 30

Principal residence exemption

Answer 30

Can be claimed if property was ordinarily inhabited anytime in the year

When deciding between two properties claim PRE on property with highest avg capital gain per year

PRE = (1 + # yrs designated)/(# of yrs owned) x CG

Up to 4 years of a rental period can be designated as PR
Claiming CCA on a property can affect PRE - shouldn’t claim CCA on any property that intention is to claim PRE

Must be designated to a property in the year of disposal

Question 31

Moving expenses - eligibility

Answer 31

Move within Canada in order to work or run a business at a new location and new home is at least 40km closer to new location than old home.

Deduction is limited to income earned at new work location, excess can be carried forward and deducted in following year to extent of income earned at new work location.

Moving expenses must have been paid by the taxpayer - must not have been reimbursed

ITA 62

Question 32

Allowable Moving expenses

Answer 32

Travelling costs (includes meals and lodging en route)
Transport & storage of household affects
15 days of meals & lodging near old/new residence
Lease cancellation costs of old residence
Selling costs of old residence
Legal and other costs of new residence acquisition (only if old residence was sold)
Up to $5K of interest, property tax, insurance and utilities on old residence while vacant pending sale
Costs of revising legal documents for new address (including driver license)
Utility connection & disconnection fees

Simplified method can be chosen for meals and km driven. $69/ day for meals. Rate for km depends on province of origin

Question 33

Interest income - personal tax

Answer 33

Taxable at marginal tax rate as ordinary income

Deemed earned in a given year where it is paid or accrued. Interest is accrued on anniversary date of investment contract if interest has not been paid.

Question 34

Eligible Dividends - personal tax

Answer 34

Paid by corporations from income not eligible for small business deduction (non-CCPCs or from GRIP of CCPCs)

Grossed up at 38%
Tax credit = 6/11 of gross up

Question 35

Non-eligible dividends - personal tax

Answer 35

Paid by corporations from income that received the small business deduction.

Grossed up at 15%
Dividend tax credit = 9/13 of gross up

Question 36

Employee home office expenses

Answer 36

Regular employee:
- utilities (does not included internet or phone)
- repairs and maintenance

Commissioned Salesperson:
- utilities
- repairs and maintenance
- 8(1)(f) or 8(1)(h): insurance & property taxes
- 8(1)(f) limits claim to commission income earned
- 8(1)(h) is for travel expenses which includes lodging

Question 37

Employee home office requirement

Answer 37

Place where individual performs 50% or more of employment duties

OR

Used exclusively for purposes of earning employment income and used on regular basis for meeting customers

Question 38

Business use of home expenses

Answer 38

Test:
Meet one of the following:
- it is your principal place of business
- use the space only to earn business income and use it on regular basis to meet clients

Question 39

Automobile benefit - employee

Answer 39

Taxable benefit = standby charge + operating cost benefit

Standby charge:
2% x original cost x months available
2/3 x monthly lease cost x months available
- above is reduced by multiply by (personal use km/ (1667 x total available months)) when business use of vehicle is >50% and personal use is < 1667 km/month
- reduced by employee payments

Operating cost benefit - Lesser of:
- Personal use km x CRA prescribed rate
- 50% of standby charge if vehicle used more than 50% of time for business

Automobile allowances:
- not a taxable benefit if they are reasonable and based on kms driven
- Taxable if unreasonable but can claim business portion of vehicle expenses with T2200

Question 40

Automobile benefit - employer

Answer 40

Expenses deductible based on automobile limits for vehicles:
- Max cost base for CCA is $30,000 before sales tax
- max deductible lease payment on exam reference schedule
- max deductible interest on exam reference schedule

Automobile Allowances:
- tax deductible limited to CRA specified rate - rates are on exam reference schedule
- higher rate for first 5000 km and reduced rate for all kms above.

Question 41

Interest free/low interest loans - Taxable benefit for employee

Answer 41

Principal is not taxable
Interest benefit is based on prescribed rate less interest paid within 30 days of year-end
Prescribed rates are in exam reference schedule section 5.

May be tax deductible if for eligible purposes (purchasing investments, business use of vehicle purchase)

Question 42

Interest fee/low interest loans - taxable benefits employer treatment

Answer 42

Interest benefit/principal is not tax deductible for the employer

If employer borrowed to lend interest-free to employee (not shareholder) interest incurred is deductible.

Question 43

Stock option - taxable benefit for employee

Answer 43

No taxable benefit on option grant date.

Public company - benefit is on exercise date
CCPC - benefit is when tax payer sell the shares they received from the stock option

Taxable benefit = FMV of shares on exercise date - option price

ACB = FMV of shares on exercise date

Benefit is reduced by 50% if:
- FMV of shares on option grant date <= option price
- For CCPCs: shares are held for at least 2 years before being sold don’t have to meet above requirement

Question 44

Stock option - taxable benefit employer treatment

Answer 44

Not deductible for employer

Question 45

Education related - taxable benefit for employee

Answer 45

Not taxable if employment related.

Taxable if personal interest training

Allowance for education for employee’s children is taxable to the employee

Free or reduced tuition provided to employee’s family member is taxable to the family member.

Question 46

Education-related - taxable benefit - employer treatment

Answer 46

tax deductible

Question 47

Discounts on merchandise - taxable benefit for employee

Answer 47

non-taxable if discounts available to all employees and discounted price is > cost

Question 48

Discounts on merchandise - taxable benefit employer treatment

Answer 48

cost of merchandise is deductible

Question 49

Gifts & awards - taxable benefit for employee

Answer 49

Cash and near cash gifts are taxable

Non-cash gifts/awards not taxable if total is < $500 annually; any amount in excess is taxable.

Non-cash long-service awards not taxable up to $500 if provided in 5-year intervals (does not impact above)

Question 50

Gifts & awards - taxable benefit employer treatment

Answer 50

all tax deductible

Question 51

Recreational facilities/club dues - taxable benefit employee

Answer 51

Non-taxable if in-house facility or another facility is contracted that is available to all employees

Non-taxable for individual membership if employer is primary beneficiary of the use.

Question 52

Recreational facilities/club dues - taxable benefit employer treatment

Answer 52

Costs deductible for fitness facility for all employees.

Deduction denied for individual membership fees or dues in any club for which the main purpose is to provide dining, recreational and sporting activities (golf or yacht club)

Question 53

Insurance premiums - taxable benefit employee

Answer 53

Life insurance premiums are taxable, proceeds on death are non-taxable.

Disability insurance premiums are not taxable if benefits are taxable

Question 54

Insurance premiums - taxable benefit employer

Answer 54

All are deductible for the employer

Question 55

Health care premiums - taxable benefit employee

Answer 55

taxable if government plan
non-taxable if private health plan

Question 56

Health care premiums - taxable benefit employer

Answer 56

deductible

Question 57

Meals - taxable benefit employee

Answer 57

Overtime meals are non-taxable

Subsidized meals are non-taxable if the employee pays a reasonable amount

Question 58

Meals - taxable benefit employer

Answer 58

overtime meals - 50% deductible like all M&E

Cafeteria (subsidized meals) - revenue is taxable and operating expenses are fully deductible.

Question 59

Social events - taxable benefit employee

Answer 59

Non-taxable if event available to all employees and cost is less than $150 per person

Question 60

Social events - taxable benefit employer

Answer 60

Deductible for up to 6 events if provided to all employees, otherwise 50% deductible like all other M&E

Question 61

Spousal travel - taxable benefit employee

Answer 61

Taxable unless spouse travelling at employer’s request and mostly engaged in business activities during trip

Question 62

Spousal travel - taxable benefit employer

Answer 62

Deductible if included as taxable benefit for employee.

Question 63

Cell phone & internet - taxable benefit employee

Answer 63

employer provided cell phone for employment duties is non-taxable

Reimbursement for employee-owned cell phone (actual hardware) is taxable

Reimbursement of cell phone service plan or internet services is non-taxable to the extent used for employment purposes (personal use is taxable)

Question 64

Cell phone & internet - taxable benefit employer

Answer 64

deductible

Question 65

Sales expenses - deduction from employment income

Answer 65

Conditions to meet:
1. employed to sell property or negotiate contracts
2. required by employment contract to pay expenses
3. required to work away from employer’s place of business
4. individual was paid fully or part by commissions
5. not in receipt of a non-taxable travel allowance
6. expenses cannot exceed commissions received by employee in the year.

Deductible expenses:
- advertising & promotion
- 50% of M&E (either entertaining a client or while travelling away from city in which employer is located)
- transportation costs and lodging
- motor vehicle operating costs
- vehicle lease costs subject to normal leased vehicle limitation
- parking when visiting clients
- property taxes and insurance on home office
- licenses

Can either claim expenses as sales person or not but not under both. More expenses can be claimed as sales person but limit of commissionable income may not be worth while.

Question 66

Travel expense deduction - employment income

Answer 66

Conditions:
1. ordinarily required to carry out duties of employment away from employer’s place of business
2. payment of travel expenses required under individual’s employment contract
3. didn’t claim a deduction for the year as a commissioned sales person
4. did not received a tax-exempt allowance for travel expenses.

Deductible expenses:
- 50% of M&E while travelling away from city of employment
- transportation costs
- lodging

Question 67

Motor vehicle expense deduction from employment income

Answer 67

Conditions:
1. required under contract of employment to pay motor vehicle expenses
2. ordinarily required to carry on the duties away from the employer’s place of business in different places
3. employee did not claim a deduction for the year as a commissioned salesperson
4. did not receive a non-taxable allowance for motor vehicle expenses
5. must maintain a log of km driven (personal vs work)

if expenses > allowance - include allowance in income and deduct expenses

Deductible expenses:
- fuel
- maintenance and repairs
- insurance
- licence and registration fees
- lease cost subject to normal lease cost limitation

Question 68

Schedule 1 business income adjustments

Answer 68

Add back:
- income tax expense
- interest & penalties on income tax assessments
- depreciation, amortization and depletion
- recaptured CCA
- accounting reserves
- tax reserves (prior year)
- accounting losses on disposition/write down
- taxable capital gains
- accounting-based expenses: warranty, pension, scientific research
- non-deductible expenses (golf club)
- charitable donations
- political contributions

Deduct:
- CCA
- terminal losses
- tax reserves (current year)
- accounting gains on disposition/writeup
- cash-based expenditures: warranty, pension, landscaping
- SR&ED deductions
- first $3K of incorporation costs
- allowable business investment losses (ABILs)

Question 69

CCA claims for CCPC

Answer 69

For certain depreciable properties acquired by CCPC on or after April 19, 2021 and available for use before 2024. Can immediately expense depreciable property up to $1.5 million in a year, limit must be shared amongst associated CCPCs. Deduction only available in year the property becomes available for use.

Excluded classes: 1 to 6, 14.1, 17, 47, 49 and 51

Question 70

Dividends received by Corporations

Answer 70

• not grossed up -> no dividend tax credit
• Deductible if received from taxable Canadian corporation

if recipient is private corporation: dividend gets part IV tax at 38.33%
- part IV tax is added to relevant RDTOH balance and then refunded when dividend is subsequently paid out.
- no tax if payor is a connected corporation

Question 71

Part IV tax - T2

Answer 71

38.33% x dividend received from non-connected taxable Canadian corporations (portfolio dividends)
PLUS
Investor’s share of dividend refund received by a connected corporation

Question 72

Rental income

Answer 72

Expense deductibility - allocations are made for shared use of property, there must be a reasonable expectation of profit

CCA cannot create or increase a loss
Separate CCA class for buildings $50K +

Question 73

Cumulative net investment loss (CNIL)

Answer 73

• account balance limits the taxpayer’s capital gains deduction to the extent that taxpayer has deducted passive investment losses

-balance is the cumulative excess of investment-related expenses over the investment-related income starting in 1988

(rental losses + interest and other carrying charges + net capital losses carried over & deducted against net taxable capital gain that weren’t eligible for capital gains deduction) - (property income including rental income, dividend & interest + net capital gains on property not eligible for capital gains deduction)

Receiving dividend income as shareholder remuneration will reduce CNIL balance

Question 74

Lifetime Capital Gains Exemption (LCGE)

Answer 74

Division C deduction claimed by individual resident in Canada against capital gains arising on disposal for qualified small business corporation shares

the amount that can be claimed is the least of the following 3 amounts:
1. unused lifetime deduction $446,109 ($892,218 x 1/2) less all previous capital gains deductions claimed
2. annual gains limit: A - B, where\
A is lesser of:
a) the net taxable capital gains for the year on all asset dispositions
b) the net taxable capital gains from the year on the disposal of qualified farming or fishing property & QSBC shares
B is the total of:
a) the amount, if any, by which net capital losses deducted in the year exceed the difference between (a) and (b) above
b) the allowable business investment losses realized in the year, whether claimed or not
3. Cumulative gains limit: Sum of all components of the annual gains limits for the current and prior years (w/o adjusting for changing inclusion rates) reduced by:
a) the sum of all amounts of capital gains deductions claimed in prior years (not adjusted for changing inclusion rates)
b) the cumulative net investment loss (CNIL) balance at the end of the current year

Question 75

Qualified Small Business Corporation Shares (QSBCS)

Answer 75

Small Business Corporation: CCPC where all or >90% of the fair market value of the assets (including internally generated goodwill) are:
a) used primarily (at least 50%) in an active business carried on in Canada by either the corporation or a related corporation; OR
b) invested in shares or debt of an SBC corporation that was connected with the particular corporation

QSBCS must meet all conditions:
a) must be an SBC (defined above) on date of sale
b) shares must be owned by the taxpayer, or spouse or a partnership related to the taxpayer
c) shares must not have been owned by anyone other than the taxpayer or related person during the 24 months before the shares are disposed of
d) throughout the 24 month holding period, more than 50% of the fair value of the assets must have been used primarily in an active business carried on in Canada

Question 76

Business Investment Loss (BIL) & Allowable Business Investment Loss (ABIL)

Answer 76

BIL results from the actual or deemed disposition of shares or debt of a small business corporation.
- doesn’t apply to two corporations not at arm’s length

ABIL is 50% of BIL and can be deducted against any source of income.

ABIL can be carried back 3 years and forward 10 years and still deductible against any source of income.
After 10 years, any unused amount of ABIL is added to taxpayer’s net capital loss carryover balance.

If a capital gains exemption claim has been in a preceding or current year then some of the BIL will be restricted. Restricted portion of BIL becomes an regular capital loss.
Restricted portion of BIL is lesser of:
- the BIL from the year
- the cumulative capital gains deduction claimed in preceding years x factor for that year

Question 77

Alternative Minimum Tax (AMT)

Answer 77

Tax is calculated in the normal way and AMT is calculated - taxpayer pays the higher of the two.

Purpose: to remove effect of tax preferences that have been used in calculating normal tax position

AMT adjusted taxable income calculation:
Normal taxable income
PLUS: 60% of non-taxable portion of capital gains
Plus: Certain tax shelter deductions
Plus: 3/5 of any stock option deduction
Less: dividend gross-up included in income & non-deductible fraction of ABILs claimed in the year
Less: $40,000

adjusted taxable income is then multiplied by 15% to obtain the starting AMT tax figure

Tax credits that apply to AMT:
- personal, age amount, medical, donations, disability

Tax credits that do not apply to AMT:
- dividend tax credit, pension income, credits transferred from others

Question 78

Shareholder Loans

Answer 78

Principal amount of loan to SH will be included in SH income in year in which loan is made, except when:
1. Inter-corporate loans or loans to non-residents or in connection with ordinary business of lending
2. Loan to employee if loan was made b/c of employment with arrangements made at time loan made for repayment
- acceptable loans: to purchase home, shares of employer or related corporation, vehicle for employment use
- cannot be made to specified shareholder (owns at least 10% of shares or not arm’s length)
3. loan repaid within one year from end of corp’s fiscal year in which debt arose (can’t remain outstanding for 2 consecutive balance sheets)
4. funds lent in ordinary course of money lending business as long as arrangements made at time loan made for repayment

• imputed interest benefit when principal amount of loan is not included in income. (interest for first year outstanding, 2nd year outstanding: principal is added to income for previous year and imputed interest benefit removed)
• repayments of loan that was included in income is deductible in year of repayment

Question 79

Factors to determine Capital Gain vs Income

Answer 79

• # and frequency of transactions
• period of ownership
• knowledge of market
• relationship to taxpayer’s business
• time spent
• financing
• advertising
• nature of assets

Question 80

Recapture & terminal loss

Answer 80

Upon disposition of depreciable property.

Calculation:
Lower of:
a) original cost
b) proceeds of disposition
Less UCC

If positive then amount is recapture and added to taxable income
if negative then amount is terminal loss and deducted from taxable income (only if there aren’t any other assets left in the CCA class)

Question 81

Personal Use Property (PUP)

Answer 81

personal use items like yacht or motorcycle.

Gains are taxable, losses are not deductible.

Minimum value rule - applies minimum of $1,000 to ACB and proceeds of disposition - means no gains on small transactions.

Question 82

Listed Personal Property (LPP)

Answer 82

Collectibles: jewelry, art, rare books, etc

All rules of PUP apply except that capital losses can be claimed but only against LPP gains.

Unused LPP losses: carry back 3 years and forward 7 years

Question 83

Capital Gains Reserve

Answer 83

Amounts not due in the year. Reserve is deducted from total gain.

Lesser of:
- total gain x (proceeds not receivable until after the end of current year / total proceeds of disposition)
- 1/5 of gain x (4 - # of preceding years)

Question 84

Replacement Property Rules

Answer 84

Election required in year replacement property acquired to amend return in year disposition took place.

Voluntary disposition requirements:
1. must be replace within 1 year from end of tax year of sale
2. must be land/building
3. used to produce income from same/similar business

Involuntary disposition requirements:
1. must be replaced within 2 years from end of tax year of sale
2. land/building/equipment

Capital Gain = lesser of actual capital gain and proceeds/deemed proceeds not reinvested
Recapture = lesser of actual recapture and recapture not reinvested
ACB of replacement property = replacement cost - CG deferred
UCC of replacement property = replacement cost - CG deferred - recapture deferred

Question 85

Loss carryovers

Answer 85

Non-Capital: back 3 years, forward 20 years. can be claimed against any source of income

Net Capital loss: back 3 years, forward indefinitely. can only be claimed against net taxable capital gains.

LPP: back 3 years, forward 7 years. can only be claimed against net LPP gains

ABIL: back 3 years, forward 10 years. can be claimed against any source of income. After 10 years an unused amount becomes a net capital loss.

Question 86

Inadequate consideration in Non-arm’s length transactions

Answer 86

When consideration is > FMV:
proceeds to transferor = actual consideration
ACB for transferee = FMV

When consideration is < FMV:
Proceeds for transferor = FMV
ACB for transferee = actual consideration

when consideration is $0 (GIFT)
Proceeds for transferor and ACB for transferee are both FMV

Question 87

Spousal transfer of property

Answer 87

Occur at tax cost of the property to the transferor (ACB for non-depreciable property, UCC for depreciable property) and thus is tax free. Automatically applies whether consideration is paid or not.

Can elect to not have above rule apply, in which case regular NAL transaction rules apply.

Attribution rules:
- applies if election is not made OR FV consideration is not paid
- does not apply if election is made AND FV consideration is paid

Question 88

NAL transfer of depreciable property

Answer 88

FMV > transferor’s capital cost: Transferee’s UCC bumped up by 50% of difference between FMV and capital cost
FMV < transferor’s capital cost: Transferee’s capital cost deemed to be same
FMV < transferor’s UCC: terminal loss is denied

Question 89

Attribution rules: NAL transactions

Answer 89

from transfer of property to spouse or related minor (children, grandchildren, nieces & nephews)
- considered minor until the year they turn 18

Income or loss arising from the transferred property will be taxed in hands of the transferor.

Income earned on property transferred with be attributed back to transferor.

For capital gains on sale of transferred property, attribution only applies when transferee is a spouse.

Attribution doesn’t apply to business income.

Question 90

Tax on Split Income (TOSI)

Answer 90

Discourages income splitting with specified individual by taxing income at highest marginal tax rate with no claim for basic personal tax credit. Usually arises from child receiving dividends from corporation controlled by parent.

Exceptions:
- Excluded business: individual must be 18 or older & actively involved in business
- Excluded shares: individual must be 25 years or older & represent min of 10% of votes & value of corporation
- Reasonableness test: amounts received are reasonable for amount of work performed, contribution of capital or assumption of risk
- Spouse who is 65 or older
- marital breakdown
- Capital gains on qualified property, eligible for LCGE

Question 91

Child Care Expenses

Answer 91

Claimed by parent with lower net income

Deduction is least of:
1. actual Amount paid
max amounts allowed for boarding school/overnight camp:
- $200/week for child under 7
- $275/week for child with disability
- $125 per week for all other children
2. Sum of annual child care expenses amounts:
- $11K for child of any age eligible for disability credit
- $8K for child under 7
- $5K for child aged 7 to 16
3. 2/3 of taxpayer’s earned income

above is reduced by any amounts claimed by higher income earner.

Earned income includes:
- employment income before deductions
- training allowances & research grants
- net business income
- government disability pension

Maximum deduction of higher income earner:
- when lower income earner is in school, medically unable to care for children, in prison, living apart due to marital breakdown
least of:
1) actual amount paid
2) sum of weekly boarding school amounts multiplied by number of weeks lower income earner is not able to care for children
3) 2/3 of higher-income earner’s earned income

Question 92

Spousal Support Payments

Answer 92

taxable to recipient and deductible for payor if:
- paid as alimony or maintenance of ex-spouse
- living apart and separated pursuant to divorce, separation agreement
- payments made pursuant to court order or written agreement
- recipient has discretionary use of amounts
- payable on periodic basis (lump sum payments are not deductible)

Question 93

Child support payments

Answer 93

• not taxable/deductible
• parent receiving support can claim child care expenses and child as equivalent to spouse

Question 94

RRSP contribution limit for current year

Answer 94

Unused RRSP deduction room carried forward + 18% x earned income of preceding year subject to annual max - pension adjustment for the prior year

Earned income includes:
- employment income including taxable benefits less employment related deductions
- business income/loss
- income/loss from rental or real property
- royalty income
- support income/payments
- research grants
- disability pension benefits

Question 95

RRSP termination

Answer 95

Must be terminated in the year taxpayer turns 71

Options for termination:
- Deregistration: lump sum fully taxable
- Transfer to RRIF: continues the deferral and amount taxed as amounts are taken out
- Purchase annuity: continues the deferral and amount taxed as received

Question 96

Tax Free savings Account (TFSA)

Answer 96

Eligible to residents 18 yrs and older

Annual contribution limit of $6,000, unused limit carried forward indefinitely
- contributions not deductible
- withdrawals not taxable but restore previously used contribution room in the following year

Not subject to income attribution rules

Question 97

Residency - tax effect

Answer 97

Full-year resident: taxed on worldwide income for full year

Part-year resident: taxed on worldwide income for part of year in which resident
- deductions allocated to period of residence
- non-refundable tax credits pro-rated

Deemed resident: non-resident who is physically present in Canada for 183 days or more in a year
- taxed on worldwide income for full year

Question 98

Residency Status

Answer 98

Primary ties:
- dwelling place in Canada
- spouse or common-law partner in Canada
- Dependents in Canada

Secondary ties:
- personal property kept in Canada
- Social ties
- Economic ties
- memberships
- maintaining driver’s license, passport…

Question 99

Dispositions upon ending residency

Answer 99

Date of becoming non-resident is later of:
- date taxpayer leaves Canada
- date individual’s spouse or dependents leave Canada
- date individual becomes resident of new county

Dispositions deemed at FMV except for real property & business property & registered pension plans.

Can elect to have deemed disposition of real property & business property (taxable Canadian property)
- make the election if there is capital or other losses that would otherwise not be able to use at time of becoming non-resident. If election results in capital loss it can only be deducted against taxable capital gains from a deemed dispositin.

Question 100

Individual filing & payment deadlines

Answer 100

Filing: April 30th unless individual has business income, then June 15th

Payment: April 30th

Question 101

Corporate filing & payment deadlines

Answer 101

Filing: 6 months after a year end

Payment: 2 month after year-end or 3 months for CCPC that is eligible for SBD

Question 102

Tax installments - individual

Answer 102

Quarterly instalments on Mar 15, Jun 15, Sep 15 and Dec 15.

When taxes payable after deducting amounts withheld at source are greater than $3,000 in current and either of 2 preceding years.

Calculation:
4 installment amount is least of:
1. 1/4 x estimated tax payable for the current year
2. 1/4 x tax payable for the immediately preceding year
3. first 2 installment: 1/4 x tax payable for the second preceding year; last two installments: 1/2 tax payable for preceding year minus first 2 instalments for current year

Question 103

Tax installments - corporate

Answer 103

Monthly installments required if Part I tax payable for year or preceding year was $3,000 or more

Corporation can choose installments calculated as any of the 3 (usually pick the smallest):
1. 1/12 x estimated tax payable for the current year
2. 1/12 x tax payable for the immediately preceding year
3. first 2 installments: 1/12 x tax payable for second preceding year. last 10 instalments: 1/10 x tax payable for the preceding year minus first two installments

Quarterly installments available for CCPC with income at or below SBD threshold in current or preceding year and had perfect compliance history for past 12 month period

Question 104

Installment Penalty

Answer 104

Installment penalty: 50% of amount by which the interest on the late or deficient instalments exceeds the greater of:
- $1,000
- $25% of the interest that would have been payable if no instalments had been paid

Question 105

Failure to file return by due date penalty

Answer 105

1st occurrence:
5% x unpaid tax + 1% x unpaid tx x # of months return is outstanding (can’t exceed 12)

Second late return (if CRA sends demand to file for first late return before second late return is filed):
10% x unpaid tax + 2% x unpaid tax x # of months return is outstanding (can’t exceed 20)

Question 106

Penalty: Repeated failure to report income equal to or greater than $500

Answer 106

has to occur more than once in a 3 year period

penalty is lesser of:
- 10% x amount of unreported income
- amount equal to 50% of difference between the understatement of tax and the amount of tax paid in relation to unreported amount

Question 107

CRA owed interest on refunds for individuals - start date

Answer 107

calculated starting on latest of the following:
1) 30 days after the balance due date for the relevant tax return
ii) 30 days after the return is actually filed
iii) the day on which the overpayment arose

Question 108

CRA owed interest on refunds for corporations - start date

Answer 108

Calculated starting on latest of the following:
1) 120 days after the end of the relevant taxation year
2) 30 days after the return is actually filed
3) the day on which the overpayment arose

Question 109

False statements or omissions penalty

Answer 109

Penalty exists whether knowing of false statements or from gross negligence.

Penalty is greater of:
- $100
- 50% of the understated tax

Voluntary disclosure program may result in penalty being waived

Question 110

Failure to e-file penalty

Answer 110

For tax preparers who prepare at least 10 T1s or 10 T2s per calendar year

Penalty is total of:
$25 per paper-filed T1
$100 per paper-filed T2

Question 111

Misrepresentations in tax planning arrangements

Answer 111

Penalty is greater of:
- $1,000
- 100% of gross revenue derived by person from activity

for someone participating in misrepresentation - penalty is greater of:
- $1,000
- 50% of tax sought to be avoided to a mx of $100,000 plus the fee charged

Question 112

Small Business Deduction (SBD)

Answer 112

For first $500K of Active Business Income (ABI). $500K limit has to be shared amongst associated corporations.

Business limit of $500,000 is reduced when:
- combined taxable capital employed in Canada for the preceding tax year of CCPC & associated CCPCs is > $10 million
- AAII for the preceding taxation year of the CCPC and associated CCPCs is > $50,000

SBD calculation: 19% x least of:
1) ABI earned in Canada
2) Taxable income, less:
- 100/28 x FTC on foreign non-business income
- 4 x FTC on foreign business income
3) annual business limit allocated to the company

Taxable capital business limit reduction: business limit x (0.225% of corporations taxable capital employed in Canada in previous year in excess of $10 million)/11,250

Passive income business limit reduction = (BL/$500,000) x 5 x (AAII - $50,000)

Question 113

Active business income (ABI)

Answer 113

Doesn’t include income from property or net taxable capital gains.

Calculation:
Net income for tax purposes (before Division C deductions)
Less:
- AII in net income
- Foreign business income

Question 114

Aggregate Investment Income (AII)

Answer 114

Property income & net taxable capital gains adjusted for certain division C deductions

Calculation:
Interest + net rental income + royalties + dividends + net taxable capital gains = AII in net income (Div B income)

AII in net income - net capital loss carryforwards deducted under division C - dividends deducted under division C = AII

Question 115

Adjusted aggregate investment income (AAII)

Answer 115

AII in net income - net taxable capital gains realized in the year from disposition of active assets - Division C deduction for dividends from connected corporations

OR

net property income included in net income (excluding dividends from Canadian corps) + dividends from non-connected Canadian corps + net taxable capital gains on disposal of passive assets

Active assets: property used principally in active business carried on in Canada by CCPC or related CCPC

Question 116

Corporate tax payable calculation

Answer 116

+ Basic federal tax (38%) on total taxable income
- Federal abatement (10%) on taxable income allocated to a province
- Small business deduction (only for CCPC) (19%)
- Manufacturing an processing profits deduction (13%)
- General rate reduction (13%)
+ Additional refundable tax
- Foreign tax credits
- Investment tax credits
= Federal Part I tax
+ Provincial tax
+ Part IV tax
- Dividend refund from RDTOH balance
= taxes payable before installments

Question 117

Corporate Taxable income

Answer 117

Net income for tax purposes (Business income + property income + net taxable capital gain)
Less division C deductions:
- Charitable donations (limited to 75% of corporation’s net income for tax purposes)
- Loss carryovers
- Dividends received from a corporation resident in Canada

Charitable donations not used in a year can be carried forward and used in any of the following 5 years.

Question 118

Taxable Capital

Answer 118

Liabilities + Shareholder’s equity - investments in debt & equity instruments of other corporations

Question 119

Manufacturing & Processing Credit

Answer 119

13% x lesser of:
1) M&P profits, less mounts eligible for SBD
2) Taxable income, less the sum of:
- amount eligible for SBD
- 4 x FTC on foreign business income
- AII (CCPC only)

Question 120

General Rate Reduction

Answer 120

13% x full rate taxable income

Full rate taxable income:
Taxable income
- income eligible for SBD (CCPC only)
- income eligible for M&P profits deduction
- AII included in taxable income (CCPC only)

Question 121

Additional Refundable Tax (ART) (part I refundable tax)

Answer 121

Paid by CCPCs on AII

10.67% of the lesser of:
1) AII included in taxable income
2) taxable income less amount eligible for SBD

Question 122

Foreign tax credits - personal tax

Answer 122

FTC for non-business income is lesser of:
1) Foreign tax paid (limited to 15% of foreign non-business income)
2) Net foreign non-business income/adjusted net income x tax otherwise payable (estimate of Canadian tax paid on Foreign income)

FTC for business income is least of:
1) Foreign tax paid
2) Net foreign non-business income/adjusted net income x tax otherwise payable
3) Basic Part 1 tax less non-business FTC

Question 123

Part IV tax

Answer 123

38.33% dividend received from non-connected taxable Canadian corporations
PLUS
Investor’s share of dividend refund by a connected corporation

Question 124

Dividend refund (corporate)

Answer 124

Dividend refund for the year is lesser of:
1) 38.33% of taxable dividends paid
2) RDTOH balance at the end of the year

Eligible dividends can not trigger a refund out of NERDTOH balance. but non-eligible dividends can have refund come from ERDTOH balance

Ordering rule:
1st: ERDTOH refund from eligible dividends paid
2nd: NERDTOH refund from Non-eligible dividends paid
3rd: ERDTOH refund from non-eligible dividends paid in excess of NERDTOH balance

Question 125

NERDTOH balance

Answer 125

NERDTOH balance at end of preceding year
Less: Dividend refund on non-eligible dividends paid in the preceding year
Plus: Refundable portion of Part I tax on investment income
Plus: Part IV tax paid on non-eligible dividends received in the year

Refundable portion of Part I tax:
Least of:
a) 30.67% of AII less (non business FTC - 8% of Foreign investment income)
b) 30.67% of (taxable income - amount eligible for SBD - 100/38.67 x non business FTC - 4 x business FTC)
c) Part I tax

Question 126

ERDTOH balance

Answer 126

ERDTOH balance at end of previous tax year
less: dividend refund on eligible or non-eligible dividends paid in previous year
Plus: Part IV tax paid on eligible dividends received in the year

Question 127

Simplified corporate tax rates

Answer 127

Federal tax rates:
CCPC ABI up to up the business limit: 9%
CCPC AII income: 38.67% Part I tax + Part IV tax
Non-CCPC income and CCPC income above business limit: 15%

Provincial rates: Densmore suggestion
add 3% for CCPC with ABI qualifying for SBD
add 11% for all other income

Question 128

Schedule 1 adjustments

Answer 128

Depreciation/Amortization
50% M&E
Other non-deductible expenses (financing costs)
Accounting gains/losses
Reserves
CCA
Taxable capital gains

Question 129

Taxable Income (personal)

Answer 129

Employment income
business income/loss
property income/loss
other income (Pension, OAS, grants, support payments, etc)
+ net taxable capital gains (1/2 of capital gains net of capital losses)
- other deductions (CPP contributions, OAS clawback, EI benefit repayment, moving expenses, child care, RRSP)
=net income for tax purposes
- Division C deductions (Employee stock options, loss carryovers, LCGE, deduction for northern residents)
= taxable income

Question 130

Associated Corporations

Answer 130

5 ways to be associated:
1. One company controls the other company either through direct or indirect ownership
2. Both corporations are controlled by the same person or same group of people
3. Each corporation controlled by a person, person who controls one corporation is related to person who controls the other corporation. One of the two people owns at least 25% of shares of both corporations.
4. One corporation is controlled by a person, the person is related to each member of a group that controls the other corporation. the person owns at least 25% of shares of both corporations
5. each corporation is controlled by a related group, each member of one related group is related to all members of the other related group, 1 or more persons who are members of both related groups, either alone or together own at least 25% shares in both corporations

Associated corporations must share $500,000 small business limit.

ITA 256(1)

Question 131

Counselling services - taxable benefit

Answer 131

Financial counselling and income tax return preparation are taxable.

Counselling services for mental health, physical health, re-employment or retirement are not taxable.

Question 132

Spousal amount (personal tax credit)

Answer 132

Amount should be reduced by income of lower income spouse less child care expenses

Question 133

Enhanced CPP

Answer 133

$3,500 basic exemption.

(Employment income - $3,500) x 0.5%

Max CPP contributable earnings is $61,600

direct deduction to income to arrive at net income for tax purposes

Question 134

CPP non-refundable tax credit

Answer 134

basis for credit = CPP paid - enhanced CPP deducted to arrive at net income for tax purpose
OR
(employment income - 3,500) * 4.95%

maximum employment income subject to CPP is $61,600 for 2021

Basis for credit is then multiplied by 15%

total CPP at 5.45% (4.95% CPP basis for tax credit + 0.5% enhanced CPP income deduction)

Question 135

Amounts received for damages to reputation - business income

Answer 135

Considered a tax-free capital receipt since they do not represent a form of income replacement.

Deduct from net income to determine net income for tax purposes.

Question 136

Personal tax credit - age amount

Answer 136

base is reduced by 15% of individuals income above threshold

base amount and threshold are on reference schedule

Question 137

EI Premiums personal tax credit

Answer 137

base is lesser of amount of EI paid and max required contribution

max required contribution is max insurable earnings x 1.58%
$953 in 2022, $890 in 2021

Question 138

Canada caregiver - infirm adult dependant relative personal tax credit

Answer 138

base is reduced by amount of dependant’s income above $17,256

Question 139

Disability amount personal tax credit

Answer 139

Cannot be claimed if individual has claimed a medical expense tax credit for a full-time attendant or care in a nursing home.
Medical expense claim of <= $10,000 for part time attendant is allowed
Supplement of an additional $5,053 is available for disabled children under 18 but is reduced for childcare costs in excess of $2,959

Any unused credit can be transferred to spouse or equivalent to spouse

Question 140

Medical expense personal tax credit

Answer 140

Medical expenses minus lower of (3% of net income or ceiling on reference schedule)

All medical expenses for taxpayer, spouse and children can be claimed on one of the spouses tax return. Usually best to claim all expenses on lower earning spouse,

For medical expenses of dependant other than a spouse or children the net income ceiling is the dependants net income.

Question 141

Home accessibility amount - personal tax credit

Answer 141

Available to taxpayer 65+ yrs old or eligible for disability tax credit

Base is lesser of costs of renovations and $10,000

Question 142

Home buyers’ amount - personal tax credit

Answer 142

$5000 is base

conditions that must be met:
- home must be in Canada
- home must be registered in name of individual or spouse
- individual or spouse must intend to inhabit the home as their principal residence within one year of the purchase date

Considered a first time home buyer if neither the individual or their spouse lived in or owned another home in the year of purchase or in the preceding four years.

Question 143

Pension income amount - personal tax credit

Answer 143

$2000 is base

Eligible pension income includes:
- periodic payments from a RPP
- annuity payments from a RRSP
- payments from a RRIF
- annuity payments for a DPSP (deferred profit sharing plan)

The RRSP, RRIF and DPSP payments are only eligible to those over 65 or someone under 65 if they are receiving the amounts as a consequence of the death of a spouse

Credit can be transferred to spouse

Question 144

Interest on student loans - personal tax credit

Answer 144

No max

Basis for credit = interest paid in year or any of the 5 preceding years for which credit has not being claimed

Private student loans do not qualify

Question 145

Tuition amount - personal tax credit

Answer 145

Min tuition fees = $100

Can be transferred to spouse or parent/grandparent to a max of $5,000 per year less any amount of the basis for the credit required by the student to reduce their tax payable to $0

Excess amounts may be carried forward for use by the student in future years

Question 146

Political contribution tax credit - personal tax

Answer 146

for contributions to federal political contributions

Credit is:
- 75% on first $400
- 50% on next $350
- 33% on next $525

Question 147

OAS clawback

Answer 147

Clawback is lesser of:
- OAS received
- 15% of net income in excess of base on reference schedule

Clawback is deducted in determining taxpayer’s net income and amount is added to income tax payable as repayment of OAS.

Question 148

EI benefits clawback

Answer 148

Clawback is 30% of lesser of:
- EI benefits received
- Amount by which individual’s income exceeds 1.25 x max yearly insurable earnings

Clawback is deducted in determining taxpayer’s net income and amount is added to income tax payable as repayment of EI.

Question 149

Pros & Cons of Incorporating (Tax considerations)

Answer 149

Pros:
- limited liability for shareholders
- tax deferral on earnings, earning are retained in corp and dividend payments to SHs are delayed
- potential tax deduction on earnings subject to SBD, depends on combination of personal and corp tax rates
- greater potential for income splitting among family members
- flexibility for owner-manager compensation (salary vs dividend)
- flexibility with year end selections
- LCGE on future disposition of shares of the corp if QSBC shares

Cons:
- cost of incorporation & ongoing compliance (FS prep, Corp tax returns, annual filing fees)
- can’t claim business net loss against other sources of personal income

Question 150

Section 85 rollover

Answer 150

Used when transferring assets of a sole prop to a corp or transferring shares of an operating company to a holdCo

Elective provision that is used to transfer most assets with accrued gains to a Canadian corp on a tax-deferred basis. In exchange for the assets, the transferor receives shares in the corporation and possible non-share consideration (NSC)

Requirements:
- assets must be transferred to a taxable Canadian corp
- assets transferred must be eligible assets
- transferor must take back a share(s) of the corp as consideration
- transferor may take back NSC (usually promissory notes of the corp or sole prop debt assumed)
- cosideration for the transfer must equal the FMV of the property transferred and can include both shares and NSC

Question 151

Eligible Property for Section 85 rollover

Answer 151

Eligible property
- inventories
- non-depreciable capital property
- depreciable capital property

Assets with accrued losses and/or terminal losses can not be transferred under Section 85, instead they are sold to the corp at FMV.

Question 152

Accounts receivable - Section 85 rollover

Answer 152

Considered capital property, with tax value equal to face value (amount owed by customer) and FMV is the amount that is expected to be collected from customers. FMV will always <= tax value and thus cannot be transferred under section 85 since there would be accrued losses.

The receivables would then have to be sold to the corp. If sold for less than face value then there will be a capital loss for the seller, with 50% deductible against capital gains. If the corp then collects more than it paid for the receivables, the corporation will incur a capital gain.

Section 22 election: joint election between purchaser and seller. Receivables no longer considered capital property and thus any losses realized by the seller are fully deductible business losses. If purchaser collects more than the amount paid to acquire receivables, additional amount collected is fully taxes as business income.

Question 153

Elected amount/transfer price - section 85 rollover

Answer 153

the amount establishes:
- proceeds of disposition to the transferor, used to determine tax consequences
- cost of consideration taken by the transferor from the corp in return for the properties transferred
- the cost of the property acquired for the corporation

Max elected amount is FMV of asset being transferred
Min elected amount is greater of: FMV of any NSC & tax value of the asset being transferred

Tax value is lesser of:
- FMV of asset
- ACB of asset (non-depreciable property or inventory)
- UCC of class of asset (depreciable property)
- Capital cost (depreciable property)

Question 154

Terminal loss - section 85 rollover consequences

Answer 154

Transferor cannot claim terminal loss on sale but is permitted to hold the terminal loss in a separate CCA class of the same classification and claim the CCA going forward.

Question 155

Temporary 100% CCA deduction rule

Answer 155

Only for CCPCs

Net additions can be fully deducted only in the year the asset becomes available for use.

For assets available for use on or after April 19, 2021 and before Jan 1, 2024.
Limited to a max of $1.5 million per taxation year.

Not applicable for CCA classes: 1 to 6, 14.1, 17, 47, 49 and 51

Question 156

Foreign advertising

Answer 156

Not deductible when advertising cost is paid to foreign broadcaster when directed at a primarily Canadian market