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Final cheatsheet - Summary Income Tax 1
Income Tax 1 (Douglas College)
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Income under 3(a)
Employment income
= salary
+ ½ paid bonuses
+ commissions
+ expense allowance = # month x
monthly allowance
+ stock option benefit = # stock x
(excise price – option price)
+ auto benefits
+ gifts exceeding $500 + gift cards
+ loans by company
– RPP contributions
– Professional dues
– Sales person expenses = home
office + auto cost + hotels +
transports + ½ meal & entertainment
Business income
= revenue
– CCA
– CEC
– Other expenses
Property income
= Eligible dividends
+ Gross up on eligible dividends =
38% * eligible dividends
+ Foreign term deposit
+ Income trust distribution = # unit *
distribution
Rental income
= rent
– CCA
– Other expenses
Other source of income
= Pension benefits
+ Spousal support received
+ EI, UCCB, RESP
Income under 3(b) (net > 0, otherwise, nil)
Taxable capital gains
= Stock option gain = # stock * (sold
price – exercise price)
+ Sculpture/ collection gain = Sell
price – adjusted cost base (1,000
min)
+ Property gain when change in use =
Fair MV value when change - cost
+ Income trust gain = proceeds of
disposition – adjusted cost base
+ Land sale gain = proceeds of
disposition – cost
– Reverse for land sale
Less: allowable capital losses
Net capital gains = taxable capital gains –
allowable capital losses
Net taxable capital gains (3b) = net capital
gains * 1/2
Deduction under ITA 3(c)
Employment loss
Business loss
Property loss
Rental loss
Net Income For Tax Purpose (division B
income) = 3(a) + 3(b) – 3(c)
Division C deductions
Stock option deduction (½ income
deduction If market price ≥ option price)
RRSP deduction: 18% of income, up to
26,010
Social assistance + worker
Home relocation loans
Loss carryforwards
Taxable income = NIFTP – Div C deductions
Tax payable
Tax credits
Personal amount = 11,635
Spousal amount (if spouse's income
<11,635) = 11,635 - spouse's income +
2,150 (if infirm)
Canada caregiver for disabled dependant
= 2,150
Age amount (if age >=65, and net income
<$84,597; only transferrable to partner) =
7225 - (net income - 36,430)*15%
Pension income amount (if age>=65, only
transferrable to partner) = 2,000
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Disability amount (transferrable to
caregiver) = 8,113
Disability supplement = 4,733
Employment Insurance, up to 836
Canada Pension Plan, up to 2564 (or
5,128 if self-employee)
Tuition fee (forwardable, transferrable: up
to 5,000 to spouse, parents, grandparents
– not children)
Canada Employment Credit = 1,178
Medical Expenses =
Medical expense of individual + spouse +
children under 18)
– which smaller (2,268) or 3% of
individual's taxable income)
+ medical expense of dependant
– which smaller (2,268) or 3% of
dependant's taxable income)
Total credit base
Volunteer Firefighters/ rescue Credit =
3,000
Political Donations: 0.75*first 400 +
0.5*next 350 + 1/3*next 525
Charitable Donations - Regular: 15%*first
200 + 33%*[which smaller (value -200) or
(taxable income - 202,800)] + 29%*the
excess
Charitable Donations - First-Time:
(Charitable Donations - Regular) + 250
Dividend tax credit = 6/11 * Gross up on
eligible dividends
Tax credits = total credit base * 15% +
volunteer credit + political/ charity
donations + dividend tax credit
Net tax payable = Tax payable – tax credits
Net tax owing (refund) = net tax payable –
amounts withheld
Auto benefit (if use car of company) = Standby charge
+ Operating cost benefit
<50% employment use
≥50% employment
use
Standby charge:
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Owns Car: 2%* Cost of car
*Months of Availability
Leases Car: 2/3* Lease
Payments exclude insurance
* months Availability
Operating Cost Benefit:
0.25*km of personal use
Capital cost
xx
(xx)
Negative Ending UCC balance = Recapture of CCA (xx)
Regular standby
charge * personal
use km/ 1667
Proceeds of disposition
Capital cost
Capital gain
Inclusion rate
Taxable capital gain
lesser of
- ½ standby charge
- 0.25*km of
personal use
Transferor’s NIFTP will increase by (recapture of CCA
[lay so duong] + taxable capital gain).
For transferee, her capital cost for capital gains
purposes will be the transfer price of xx. However,
because the FMV of the asset exceeded its original
capital cost, value used for CCA and recapture
calculation is:
[capital cost + ½*(proceeds of disposition – capital
cost)]
Home office = % of home use for office * all costs
except mortgage interest
Auto cost (if use personal car for work) = CCA +
Operating cost benefit
CCA in purchase year = ½ * 30% * 30,000 maximum
CCA in current year = % employment use * 30% *
(30,000 – CCA purchase year)
Operating cost benefit = % employment use * auto
operating expenses
CCA of house from personal use to rental
Cost of building (= property – land)
Fair market value at change in use (= property – land)
Increase in value = fair MV – cost
Inclusion factor = ½ * increase in value
Cost for UCC & CCA purposes = Cost + Inclusion factor
CCA base = ½ cost for UCC & CAA purpose
CCA = CCA base * 4%<--- rate for class 1.
Net rental income = Net rental income before CCA –
CCA
Reverse for land sale (if customer hasn’t fully paid for
the sale) = lesser of:
land sale gain * unpaid amount/sale price
land sale gain * 20% * (4-0)
Non-Arm’s Length transfer
FMV > Transferor’s Capital Cost
UCC balance
Lessor of:
Proceeds of disposition xx
xx
xx
xx
½
xx
FMV < Transferor’s Capital Cost
UCC balance
xx
Lessor of:
Proceeds of disposition xx
Capital cost
xx
(xx)
Negative Ending UCC balance = Recapture of CCA (xx)
Transferor’s NIFTP will increase by (recapture of CCA
[lay so duong])
In this case, where the FMV of the asset is less than its
capital cost, ITA deems the transferee’s capital cost of
the transferred asset to be equal to the transferor’s
capital cost, and amount of xx. This capital cost will be
used for purposes of determining any capital gain
and/or recapture on a future disposition.
The xx (=capital cost – FMV) difference between this
value and the transfer price will be considered deemed
CCA. The resulting UCC balance of xx (gia tri lessor of)
will be used by transferee for calculating future CCA.
Defined benefit
xx
Employer
benefit of some
Defined
contribution
RRSP, DPSP
specified
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agrees to
provide
At risk
% of
employee’s
average
earnings for
each year of
service
employer
contribution.
Benefit based on
amount of
contributions &
accumulated
earnings
employee
RRSP
- Deduct
contributions
- Tax free
earnings
- Taxed on
withdrawal
RRSP Deduction litmit =
A = Balance at end of last year
+ B = lesser of RRSP Dollar Limit
for current year OR 18% of
Earned Income for previous year,
reduced by the PA of previous
year
+ R = Pension Adjustment
Reversal for the year
- C = Past Service Pension
Adjustment for the year
RRSP Dollar limit this year = money purchase limit last
year
Child Care Cost limit
$11,000 if disability tax credit
$8,000 if child under 7
$5,000 if Child age 7 to 16 OR Child > 16 with disability