Sheridan College Tax ACCG70031 Session 5

Sheridan College Tax ACCG70031 Session 5 - ACCG70031...

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sheridancollege.ca ACCG70031 Session 5: T1 Tax return basics, Taxable income and tax payable calculation
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sheridancollege.ca AGENDA Tax rates Tax returns Income - inclusions Deductions from income Tax credits
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sheridancollege.ca Learning Outcomes Identify specific inclusions and deductions from income Compute amounts to be included and deducted to determine income
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sheridancollege.ca Federal tax rates for 2016 first $45,282 15.00% over $45,282 up to $90,563 20.50% over $90,563 up to $140,388 26.00% over $140,388 up to $200,000 29.00% over $200,00033.00% Indexed every year Source: http :// Tax rates
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sheridancollege.ca CRA administers the income taxation for most provinces of Canada 2016 Ontario Rates first $41,536 5.05% over $41,536 up to $83,075 9.15% over $83,075 up to $150,000 11.16% over $150,000 up to $220,000 12.16% over $220,000 13.16% Tax rates
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sheridancollege.ca Prescribed interest rates or amounts owed to the CRA and to any amounts the CRA owes to individuals and corporations – quarterly changes Income tax – 2 nd Quarter of 2016 The interest rate charged on overdue taxes, Canada Pension Plan contributions, and employment insurance premiums will be 5%. The interest rate to be paid on corporate taxpayer overpayments will be 1%. The interest rate to be paid on non-corporate taxpayer overpayments will be 3%. The interest rate used to calculate taxable benefits for employees and shareholders from interest‑free and low-interest loans will be 1%. The interest rate for corporate taxpayers’ pertinent loans or indebtedness will be 4.75%. For more info: http:// Tax rates
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sheridancollege.ca Subsection 2(1) of the ITA, establishes the liability for Tax - all residents of Canada shall pay a tax on income Section 2(2) establishes the calculation of taxable income, and that is Taxable income = Net income per Division B plus/minus adjustments as permitted by Division C Income Tax Act Reference
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sheridancollege.ca Net income per Division B (section 3) Minus/plus Division C deductions = Taxable income Must account for Division E tax credits = Tax payable for the year Liability for Tax
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sheridancollege.ca ss. 2(1) – “every person resident of Canada” - common-law resident - deemed resident - part-time resident Person – individuals, corporations, trusts Who pays tax?
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sheridancollege.ca Individuals – T1 General Income Tax and Benefit Return (T1 return) Corporations – T2 Corporation Income tax return (T2 return) Trusts - T3 Trust Income Tax and Information Return (T3 return) How do they report and calculate the tax payable?
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sheridancollege.ca Report all income from all (world-wide) sources Sources: Employment Business income (active) Property income (passive) Other: pensions, retirement allowances, spousal support payments, social assistance payments, workers' compensation, etc.
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