Corporate Tax Flashcards
What class is vehicles under 30k?
Class 10
What class is furniture?
Class 8
What class is computer equipment?
Class 50
What class is buildings?
Class 1
What class is anything under $500? What is the rate?
Class 12- 100%
What class is Roads, parking lots, sidewalks, airplane runways, storage areas, or similar surface construction
Class 17
What class iMachinery and equipment acquired after 2015 and before 2026 ?
Class 53
What are 11 things that must be added back to Corporate Tax ?
50% of Meals and Entertainment
No illegal payments (bribes) and government fines and penalties
No reserves [contingencies, warranties etc.]
No remuneration accruals that are not paid within 180 days after year end
No personal or living expenses [i.e. Travel expenses to the office]
Purpose Test
Capital Test
No recreational facilities or club dues [golf club]
No Home office expenses except as permitted
No deduction for foreign advertising to a Canadian Market (website advertising is not caught by this rule)
2 conventions per year within scope of the business [meet income earning purpose test]
Income tax provision
Depreciation and amortization
Capital losses
Commission/legal fess paid on purchase of an investment
Donations to charity [take Div C deduction]
Political Donations [not deductible anywhere]
Interest and property tax on vacant land
Stock issued under ESOPs
Cash out payments under ESOPs if election made
Accounting write downs
Car expenses in excess of amounts allowed for tax
What are 5 things that can be deducted?
Landscaping on a cash basis
Expenses related to financing [shares partnership units or debt] [1/5 per year]
Expenses of representation to government
To get rezoning, liquor license, a patent, cost of voluntary disclosure
Site investigation
Utility service connections
Disability-related modifications to buildings and Equipment
CCA
What do we have to look at for business or CG?
Intention to hold and use to earn income from business or property is then going to be CG
Intention to resell the asset at a profit is business income
Exception: Vacant Land gains are often business income because the taxpayer is unable to provide evidence to support intention to hold. Better to carry out intention and build something.
Replacement Property Rules- Involuntary Rule?
Involuntary (theft, fire or expropriation) AND the property must be replaced within 2 taxation years/24 months after the year-end in which the POD are received/receivable.
Replacement Property Rules- Voluntary Rule?
Voluntary (a sale) and the property must be a “former business property” (defined as land and buildings used in a business other than real estate rentals) and replaced within 1 taxation year (12 months whichever later) after the year end in which the POD are received/receivable.
POD are receivable at the earliest of?
Day the taxpayer has agreed to compensation for the property disposed
The day a court determines the taxpayer’s compensation
Where a claim is not taken to court within 2 years of disposition, the day that is 2 years following the day of disposition.
Golden Rule for Voluntary or Involuntary Rule?
Must replace the entire proceeds on the replacement property to defer the CG. If $1 of the proceeds is not spent, you will have a $1 CG ($0.50 TCG)
Only need to spend the amount of the recapture on the replacement property to defer the recapture of CCA on a sale and replacement.
Any deferred CG is deducted from the ACB and UCC of the replacement property. Any deferred recapture is also deducted in computing the UCC of the replacement property.
Example: if POD - ACB = 5k CG then new ACB is cost less the deferred CG
Recapture = lesser of cost and POD
Then Recapture - UCC = recapture
New UCC is the new ACB less deferred recapture
How do we allocate the proceeds between land and building?
The proceeds for building must be greater than UCC of building. The remaining amount goes to land.
