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Chapter9 - Other Deductions and Income Chapter 9 By James B...

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Unformatted text preview: Other Deductions and Income Chapter 9 By James B. MacNeill Other Deductions and Income Subdivision d Subdivision e Other Sources of Income Deductions in Computing Income Amounts not Included in Income Subdivision g Other Sources of Income Section 56 Lists Miscellaneous Types of Income Deals with Marital Breakdowns Section 56.1 Pension Benefits 56(1)(a) Superannuation Pension Benefits OAS CPP EI Retiring Allowances Retiring Allowances Defined in Section 248 Includes Payment in Respect of: a) Retirement from an office in recognition of long service b) Loss of office including court awarded damages Support Payments and Receipts Section 56(1)(b) and 60(b) are Mirror Images Only Applies to Spousal Support Spousal Support Allowances on a Periodic Basis For Maintenance of the Recipient Recipient has Discretion over the Funds Payments Must be Made to a Spouse Made Pursuant to an Order of a Competent Tribunal or a Written Agreement Definitions Spouse Extended Meaning includes Common Law Partner Allowance Gagnon v. The Queen, 86 DTC 6179 amount must be predetermined and limited be paid to discharge a certain type of expense recipient must be able to dispose of the amount completely Third Party Payments 56.1(1) Deals with these Payments Medical Bills, Mortgage Payments, Tuition Fees Applies to Payments Made in the Previous Year Provided The Order or Agreement Specifies 56.1(2) and 60.1(2) Deferred Income Plans Type RRSP HBP LLP DPSP RESP RRIF Provision 56(1)(h) 56(1)(h.1) 56(1)(h.2) 56(1)(i) 56(1)q 56(1)t RESP Defined in 146.1(1) Contributions Up to $4,000 per Year per Beneficiary $42,000 LifeTime Contribution over 21 Years Not Deductible Investment Income Sheltered Taxable to the Beneficiary CESG Canadian Educational Savings Grant 20% of Annual Contribution up to $2,000 (i.e., $400 per child) Maximum Total is $7,200 Grants can be Carried Forward Educational Assistance Payments 56(1)(n)(o) Scholarships, Fellowships, Bursaries Research Grant in Excess of Expenses Generally $500 Exemption $3,000 if Recipient Claims the Education Tax Credit Indirect Payment 56(2) AntiAvoidance Provision Applies to Diverted Income or Rights to Income Champ and McLurg Cases Newman Case RRSP'S To Provide Retirement Income Tax Assisted for Contribution Earnings Tax Deferred Deduction Limits + Unused Carry Forward Contribution Room + Lesser of: a) $18,000 a) 18% of earned income of previous year Pension Adjustment + Pension Adjustment Reversals Carry Forward Room Indefinite Carry Forward Lose Compounding Excess Contributions $2,000 De Minimus Amount 1% per Month Penalty Contributions of Property Can Contribute Shares, Mutual Funds, Bonds Transaction Takes Place at FairMarket Value Gains are Taxed Losses Denied 40(2)(g)(iv) TwoYear Look Back Contribution to a Spousal Plan is Taxed in the Hands of the Contributor If Spouse Withdraws Any Funds Within Two Complete Years After the Contributor Made the Contribution Withdrawal Before Retirement Withholding Tax 0 $5,000 $5,000$15,000 $15,000 10% 20% 30% Home Buyer's Plan (HBP) Available to First Time Home Buyers Annuitant and Spouse Could Not Have Owned a Home Within Last 5 Years May Withdraw up to $20,000 Must be Repaid Within 15 Years Repayment Begins 2 Years After Withdrawal Missed Payments are Taxed as Income LifeLong Learning Plan (LLP) To Assist in Retraining Annual Withdrawals Cannot Exceed $10,000 Maximum Withdrawal Total is $20,000 Paid Back in Annual Instalments Over 10 Years Repayment Starts at the Earlier of 5 Years from First Withdrawal and the Year Following Graduation Retirement Options Must Do Something by December 31st of the Year You Turn 69 Years of Age Annuities Fixed Term Life Annuities RRIF Consideration Rates of Return Future Income Needs Age of Annuitants Flexibility of Investment Estate Planning RRSP on Death Generally a Refund of Premiums May Designate Spouse as Beneficiary for Rollover May Designate an Infirm Child as a Beneficiary for Rollover Otherwise Taxed on Final Return Direct Transfers Generally Can Transfer From/To RRSP, RPP, and DPSP TaxFree Transfer Moving Expenses Found in Section 62 In Respect of an Eligible Relocation Deductible Moving Expenses Travel Costs to New Residence Transporting and Storage of Household Effects Temporary Accommodation Lease Cancellation Costs If Old Residence Sold, Land Transfer Taxes, Legal Costs of New Residence Selling Costs of Old Residence Other Eligible Relocation At Least 40 kilometres Closer New Business or Employment Childcare Expenses Found in Section 63 For Arm's Length Childcare Expenses Children Cannot Be Over 16 Years of Age $175 per Week for Camp Available to the Lower Income Spouse Limitation Least of: 1) 2/3 of Earned Income 2) Amount Paid 3) $7,000 X Number of Children Under Age 7 + $4,000 X Number of Children Over Age 6 Other Deductions and Income Chapter 9 By James B. MacNeill ...
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