4561 Lecture 9 June 15 10

# 4561 Lecture 9 June 15 10 - 1 4561 LECTURE 9-TAXABLE INCOME...

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1 4561 LECTURE 9 -TAXABLE INCOME & TAXES PAYABLE – last updated June 15, 2010 Readings - ADMS 3520 Lecture 6 notes – the 3520 lecture notes cover most of the basic points on this topic. This 4561 lecture focuses on the details and practical applications to problem material - FIT Ch. 10, omitting the following parts: - Example Problem 10-3 under ¶10,040 (Larry Loser) - ¶10,070 Ordering of section 111 loss carryovers and Examples 10-4 and 10-5 (Karl Konfused and Larry Loss-Carryover) - ¶10,090 Taxable Income of Non-residents and ¶10,400 Credits for Part-time and Non-Residents (discussed in Lectures 10 and 11) - ¶10,420 to 10,430 Income not earned in a Province, Credit for Employees outside Canada - ¶10,440 to ¶10470 Refundable Credits (Students have to know that they exist (as per the lecture notes, heading 12). They do not have to know amounts/calculations) - ¶10,490 Foreign Tax Credit (Students can assume that all foreign taxes are eligible for credit. Students do not have to know calculation) - ¶10,520 Tax Reduction on Lump Sum payments - ¶10,540 Minimum Tax (students are not responsible for AMT and students are not responsible for the appendix in the notes) Income Tax Act Sections 82, 110(1), 110.6, 111, 117, 118, 118.01, 118.02, 118.03, 118.1, 118.2, 118.3, 118.4, 118.5, 118.6, 118.7, 118.8, 118.9, 118.92, 121, 127(3), 127.5 Recommend Ch. 10 Exercises 4, 5, 6, 7, 8, 9, 12 Multiple Choice 1-4 Problem Set (deferred from last week) Chapter 9 Problem 10 (Elaine Matthews) Problem 11 (Ms King) Complete tax calculations expected. Problem Set: Chapter 10 Problems 6 (Mrs. Plant) Problem 8 (Mrs. Hopeful), Problem 13A (Patty Parent) – do not do provincial tax Problem 14 (Clare and Alan)

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4561-9 2009 TAX INFORMATION In midterm 2 (the final content exam), you will be given a list of formulas identical to what is in this box OAS CLAW BACK = lesser of OAS received and 15% of Division B income in excess of \$66,335 TAX BRACKETS Taxable Income Tax \$40,726 or less 15% \$40,727 to \$81,452 \$6,109 plus 22% on next \$40,726 \$81,453 to \$126,264 \$15,069 plus 26% on next \$44,812 \$126,265 or more \$26,720 plus 29% on remainder TAX CREDITS BASIC CREDIT = \$10,320 x 15% = \$1,548 SPOUSE/MARRIED/SPOUSAL EQUIVALENT (ELIGIBLE DEPENDENT) =15% x (\$10,320 minus spouse's net income) =\$1,548 MAX CHILD = 15% X \$2,089 INFIRM DEPENDENT > 17= 15% x (\$4,198 minus dependant's net income > \$5956) = \$630 MAX CAREGIVER CREDIT = 15% x (\$4,198 minus dependant's net income > \$14,336) = \$630 MAX AGE CREDIT = 15% x (\$6,408 - 15% x (net income - \$32,312) = \$961 max PENSION CREDIT = 15% x 1st \$2,000 of "pension income"= \$300 maximum (not indexed) ADOPTION CREDIT = 15% of 1st \$ 10,909 of eligible adoption expenses CHARITABLE DONATIONS = 15% of first \$200 and 29% of balance (not indexed) (eligible donations generally limited to 75% of net income) MEDICAL EXPENSE CREDIT = 15% ((B - C) + D) where B = eligible medical expenses of the taxpayer, spouse or minor dependants C= the lesser of 3% of the taxpayer’s net income and \$2,011 D = E – F (Maximum: \$10,000) E = eligible medical expenses of the adult dependant F= the lesser of 3% of the adult dependant’s net income and \$2,011 DISABILITY CREDIT = 15% x \$7,196 = \$1,079 Copyright J. Magee/York University [[email protected]] 2
4561-9 (CONTINUED) EDUCATION-RELATED CREDITS (not indexed) ( a) TUITION CREDIT = 15% x eligible tuition fees (b) EDUCATION CREDIT = 15% x \$400 per (part or full) month for full time student = 15% x \$120 per (part or full) month for part-time students (c) TEXTBOOK CREDIT = 15% x \$65 per month for full-time students

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