Final Study

Question 1

Compare Dividends vs. Interest income

Answer 1

BOND: interest rate * amount - (tax from interest income) = after tax interest income
DIVIDEND: yield * amount + gross-up = taxable dividend - tax payable = owed tax - DTC (federal 6/11 + provincial)*amount = tax payable or saved + yield amount

Question 2

formula for RRSP contribution room

Answer 2

Unused deduction room + annual addition: lesser of 2018 $ limit (26230$) or 18% of 2017 earned income - PA of 2017

Question 3

Earned income for RRSP

Answer 3

Salary + taxable benefits - union dues and RPP = net employment income (+/-) business income (+/-) rental income + spousal support = earned income

Question 4

Day camps

Answer 4

Not include all cost only the allowable period cost of (125/200/275) per week.

Question 5

Child Care Expenses

Answer 5

The parent with the least income should claim unless he is a full time student or hospitalized. The amount of child expenses is the least of :

• actual amount
• 2/3 of earned income
• annual expense limit: 11K/8K (<7y)/5K
• Periodic expense limit (2.5% of annual)

Question 6

Moving expenses

Answer 6

NO house hunting
NO old house home costs
NO old town housing and food
MAX 15 days of lodging and food in new town with provincial flat rates for meals

Question 7

5 LPP

Answer 7

coins, stamps, art, rare books, jewelry

Question 8

Principle residence exemption

Answer 8

You start by calculating the capital gain per year of ownership. The one that has the highest should get 100% exemption while the other one only partial:
years it was primary +1 *capital gain / total years

Question 9

Capital gains reserve

Answer 9

when not the full amount of capital gain is paid right away. can carry forward up to 5 years

Question 10

calculation capital gains reserve

Answer 10

reserve is the lesser of:
capital gain * receivable/POD OR
capital gain * 1*(4-#preceding)/5
THEN: total capital gains - reserve = 50% of that is capital gain

Question 11

Non-arms length transfer of property

Answer 11

the transferor must recognize the transfer takes place at fair market value

Question 12

stock dividend

Answer 12

10% of the # shares currently are given @ the price per dividend mentioned

Question 13

Capital gains

Answer 13

POD - ACB *50%

Question 14

shares gifted to spouse

Answer 14

shares transferred @ original price paid and NO capital gain is registered

Question 15

shares gifted to minor child

Answer 15

deemed disposition @ fair market value, taxable capital gain @ the time of transfer

Question 16

Additional caregiver amount

Answer 16

total 6986 if individual income is below 16405 including spousal credit:
if NO spousal credit: caregiver is 6986
if spousal credit is between 0 < x < 6986, caregiver is 6986 - spousal
if spousal is > 6986 then NO caregiver

Question 17

Social repayment benefit for OAS when NI>75910

Answer 17

the lesser of 7000 and 15%(NI-75910)

Question 18

Pension benefit

Answer 18

Eligible to get up to 2000 when they get RRIF up to the amount of RRIF they got

Question 19

Age credit

Answer 19

7333 - 15% (NI-36976)

Question 20

What credits can trasnfer to spouse

Answer 20

Age
pension
disability
caregiver
spousal

Question 21

ABILs

Answer 21

Allowable Business Investment Losses, where you can deduct against any type of income for 10 years & carry back for 3 years then unlimited for capital gains

Question 22

Supply Categories GST

Answer 22

1) fully taxable
2) zero rated
3) exempt supplies

Question 23

Fully taxable

Answer 23

the consumers pay taxes and the company pays taxes to its suppliers

Question 24

zero rated

Answer 24

the consumer do not pay but the company pays to its suppliers

Question 25

exempt supplies

Answer 25

consumer does not pay taxes and the company does not pay taxes

Question 26

Medical expenses

Answer 26

Amount paid (for self+spouse+kids<18) MINUS lesser of 2302 and 3% of Net Income +
amount paid for dependent >18  MINUS lesser of 2302 and 3% of Net Income of dependent

Question 27

Net income for tax purposes

Answer 27

3a + 3b -3c -3d

Question 28

Taxable Income

Answer 28

Net income for tax purposes - specified deductions (stock options deduction, social assistance, lump sum, life capital gain deduction, losses prior years)

Question 29

Tuition credit

Answer 29

Max 5000 against before tax income. rest can be transferred up to max 5000 / year the rest can be carried forward

Question 30

Car credit (owned)

Answer 30

2% of value * #months of availability + 0.26$*km

Question 31

Car credit (leased)

Answer 31

2/3 of leasing - insurance * #months of availability + 0.26 $ per km

Question 32

If car used primarily for work

Answer 32

then Standby charge * personal use KM/ 1667 km *months + lesser of 50% of reduced stand by and 0.26 *km