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4561 Lecture 3 May 13 2010

4561 Lecture 3 May 13 2010 - 4561-3 1 1 ADMS 4561 Lecture 3...

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4561-3: 9/22/09 1 1 ADMS 4561 Lecture 3 – Employment Income – last updated May 13, 2010 for 2010 federal budget changes Readings FIT Ch. 3 (entire chapter – some will be review, some will be new) 1 (bring with you) Income Tax Act: Sections 5, 6, 7, 8, 13(7)(g), 67.1-67.3, 80.4, 80.5, 110(1)(d),(d.1),(j), 248(1) (relevant definitions only) Reg. 7307 (s. 67.3 covered in Lecture 1) (bring with you) CRA IT 470R, IT- 522R and Income Tax Technical News 13 (print them) ADMS 3520 lecture notes (print them and bring them with you) Recommend Ch. 3 all Multiple Choice Questions and Exercises ANSWERS ARE AT THE BACK OF THE BOOK. Problem Set 2: Ch. 3, Assignment Probs. 1 (Chow), 8 (Anita Lee), 10 (Leonard), 14 (Robby Beamon) and 16 (Ned Negotiator) and Chapter Example at ¶3,600. You are expected to do a tax calculation for Problem 10 (Leonard) assuming that he has no dependants and can deduct his RRSP contribution. Do Teach test Questions (at the back of the notes) on your own to test your knowledge of section references. FIT has good examples of the calculations of the most complex employee benefits and deductions. We teach car benefits and car deductions in this course. The rules for other employee benefits (such as disability plan benefits, interest benefits and employee stock option benefits) and other employee deductions (such as home office expenses) were taught in ADMS 3520. Note: The prescribed rates for the first quarter of 2009 are 2, 4 and 6. The prescribed rates for the second and third quarters of 2009 are 1, 3 and 5. Prescribed rates will always be given to you on a test or exam 1.1 In ADMS 3520 Lecture 2, you learned - that the most attractive form of employee compensation involves benefits that are deductible to the employer but are either received tax free by the employee or are taxed later in the hands of the employee (i.e., tax deferred). - the common law factors used to distinguish between employment income (subdivision a) and business income (subdivision b) and that this distinction is very important The non-exhaustive list of factors include: 1 Joanne Magee [[email protected]]
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4561-3: 9/22/09 2 1. Control (treated like other employees? specialized knowledge? fills out time sheet? has office on premises? must adhere to office hours? able to have other clients?) 2. Who owns tools and equipment, hires helpers 3. Risk of loss/opportunity for profit ((fixed fee contract or hourly? who pays for expenses? commissioned?) 4. Has other clients, economic dependence on work (# days/week; % of income) 5. Duration of contract/specific result. 6. Employee benefits provided? 7. Other relevant factors, including the intention of parties (e.g. written contract and invoices) The most important cases on this issue are Sagaz (SCC) and Wolfe and Winnipeg Ballet (FCA) which followed Sagaz. Control (compared to other employees) will always be a factor (emphasized in all 3 cases), contracts are always important (not just a tie-breaker – clarified in Winnipeg Ballet) and a worker can be self-employed even if there is only one contract (Wolfe).
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  • Summer '10
  • frankovic
  • Expense, Employee Benefit, Taxation in the United States, Employment compensation, Employee stock option, Joanne Magee

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4561 Lecture 3 May 13 2010 - 4561-3 1 1 ADMS 4561 Lecture 3...

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