Acco340Lecture 8 - Other Income

Acco340Lecture 8 - Other Income - Lecture8

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                     Lecture   8                                                                                                                                                                                              OTHER  INCOME, OTHER DEDUCTIONS AND REGISTERED SAVINGS PLANS -Chapter 9   Ignore Income Attribution pages 420-426    OTHER INCOME                                                                                                                                                                               ( Subdivision “d” Inclusions)                PENSION BENEFITS ITA 56 (1) (a)(і) requires that payments received from certain pension plans are included in income (eg RPP,  CPP/QPP, OAS).   QPP/CPP payments can be split with a spouse. RETIRING ALLOWANCES ITA 56(1)(a)(ii) requires that retiring allowances are included in income. ITA 248 defines  retiring allowances ”  as an amount received as the result of  an employee’s death , or a  benefit described under ITA 6(1)(a)(iv), which is received a)  on or after retirement in recognition of long  service ; or b) in respect to  the loss of an office or employment , whether or not received in reference to  “damages” actions. Note: ITA 60 (j) allows for some retiring allowances for services prior to 1996, to be deducted up to certain  limits, if they are transferred to an RRSP within 60 days of the year end in which received. (To be discussed  further in RRSP Lecture) LUMP SUM PAYMENTS As individuals are taxed on a cash basis,  retroactive lump sum payments are also taxable when received and could thereby cause hardship (eg, pushed in higher tax brackets).  Tax relief is available to “qualifying  amounts”, as defined under ITA 110.2(1), (eg, back wages, etc.) Note:  ITA 110.2(2) provides for a deduction for the “specified portion” of “qualifying amounts ”  (lump sum s  over $3,000) received  after  1977  .   Alternatively, ITA 110.31 describes a special tax that would be payable  for amounts that are deducted under ITA 110.2(2). The goal of both procedures is  to spread the lump sum  over earlier years thereby eliminating the adverse effect that progressive rates has on the total tax  bill. Re-computing tax liabilities for prior years, causes no revisions to RRSP contributions or repayment of 
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This note was uploaded on 01/24/2011 for the course ACCO 330 taught by Professor Mastromonaco during the Fall '10 term at Concordia Canada.

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Acco340Lecture 8 - Other Income - Lecture8

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