Ch.14: Rights & Obligations
Type of taxpayer and Type of Income equals Tax Treatment
Self-assessed liability drives rights & obligations
Reasons for filing include:
When you owe tax
When you sell capital property
When government demands a return
Corporations file tax returns every year; get to choose fiscal year; deadline is 6 months after fiscal year. Payment is 3 months after fiscal but for CCPC have one extra month
Reassessment period for Corporations is four years while CCPC is only three years
Deadline date for individuals is April 30, if spouse/business owner it is June 15
Individuals have to pay tax owing before April 30
Government gets money from you: (3 ways)
Holdings
Business pay installments
Corporations have to pay installments if tax payable greater than $3000 in one or two years?
Individuals; if > $3000 (tax payable – tax withheld) in current year & 1 of 2 previous year
Failure to report income Penalty includes:
Penalty of 10% of income
Also, previous failure to report in last three years
False Statement/Omission Penalty includes:
Greater of $100 and total 50% of tax
CRA has choice if repeat offence within three years
Preparer’s Penalty includes (2 choices) :
Greater of $1000 & total of person’s gross entitlement (NOA)
Imposed when 3rd party participates in false statement, person knows or expected to know is false statement (except to culpable conduct)
Penalty imposed on preparer when participates in false statement on behalf of another person
Minimum $1000, maximum 50% of tax to be avoided or excess refund
Upper limit $100,000& fee charged by preparer
Did the tax payer know, reasonably expect to know, rely in good faith on information provided by another person, and exhibit culpable conduct.
CRA has three years after notice of assessment date to come after you except if fraud or taxpayer waives right to three years
Taxpayer can file notice of objection; later of one year from due date & 90 days of Notice of assessment
Ch.3: Employment Income
If you get a car, check if employer owned or leased
Check how much km for work or personal purposes
Depending on two criteria, you calculate stand by charge or operating benefit
If owned:
Standby charge = 0.02 x cost of car + HST x number of months
If use car for more than 50% for work purposes, get to prorate (Lesser of Personal km driven or 20004 / 20004 ) * Standby charge
Operating benefit = 0.27 x personal km driven
Operating benefit = If used > 50% for work, get to pick lesser of above or 50% of standby charge
If leased:
Standby charge = 2/3 of lease payment + HST multiplied by number of months
If use car for more than 50% for work, get to prorate (Lesser of Personal km driven or 20004 / 20004 ) * Standby charge
Operating benefit = 0.27 x personal km driven
Operating benefit = If used > 50% for work, get to pick lesser of above or 50% of standby charge
Allowance
Reimbursement
$1000 allowance, for example income inclusion
Employer owns car, you can deduct expenses from employment income!
Employee owns car
Not taxable if reasonable & on per km basis, employer giving free money
Cannot deduct those expenses from employment income
Public Corporation
CCPC
Nothing when received
When exercised income inclusion (Added to the cost of shares)
Capital Gain when sold
Nothing when received & exercised
Income inclusion (Added to the cost of shares) & Capital Gain when sold
RPP, Employer contributes & Employee contributes – not taxable for employee, deduction for employee
Define benefit I put 6, you put 6, you get x dollars every year
Defined contribution – I put 6, you put 6, once you turn 65, pension depends on investment