IFITC Chapter_9

IFITC Chapter_9 - Chapter 9 Other Sources of Income and...

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Chapter 9 Other Sources of Income and Deductions in Computing Income 1
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Other Sources of Income ITA Reference Other Sources of Income 56(1)( a )(i) – (iv) Benefits in the nature of pensions 56(1)( a )(ii) Retiring allowance and other payments on termination of employment 56(1)( b ) Support receipts and payments 56(1)( d ) Annuity payments 56(1)( h ), ( i ), ( q ), ( t ) Amounts received from deferred income plans 56(1)( n ) Education assistance payments 56(1)( l ) Legal costs awarded by a court 56(1)( u ) Social assistance payments 56(1)( v ) Workers’ Compensation 56(2) Indirect payments 56(6) Child care benefit 56.4 [Proposed] Restrictive Covenants 2
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Benefits in the Nature of Pensions Includes pension benefits received under the Old Age Security Act and CPP Income splitting – CPP Income splitting – Pension income 3
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Retiring Allowances and Other Payments on Termination of Employment Retiring allowance is taxable Specifically includes: a) Retirement from an office or employment in recognition of long service, or b) Loss of office including court-awarded damages received by the taxpayer, or as a bequest, by a dependant or relation of the taxpayer or his/her legal representative. 4
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Support Receipts and Payments Spousal support: Recipient has an inclusion while payer has a deduction Support deductible if: 1. Payments are made as allowances on a periodic basis; 2. Payments are made for the maintenance of recipient; 3. Recipient has discretionary use of the amounts; 4. Payments are to spouse who is living apart because of marital breakdown or paid by a natural parent of a child of the recipient; and 5. Payments are made pursuant to an order of competent tribunal or a written agreement. 5
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Support Receipts and Payments Child support payments Not deductible by payer Not included in income of recipient Legal fees To enforce pre-existing rights support are deductible 6
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Amounts Received from Deferred Income Plans Receipts from the following included in income: Registered retirement savings plan (RRSP) Home Buyer’s Plan (HBP) Lifelong learning plan (LLP) Deferred profit sharing plan (DPSP) Registered education savings plan (RESP) Registered disability savings plan (RDSP) Registered retirement income fund (RRIF) 7
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Registered Education Savings Plan (RESP) Allow contributions to a plan to fund post-secondary education for a qualified beneficiary Contributions are not deductible and not taxable when the plan allows their withdrawal Investment income of the plan is sheltered until beneficiary withdraws Time Limit Type of Plan Limit Years of contribution Regular 31 years Disabled 35 years Termination Regular 35 years Disabled 40 years Lifetime contribution limit $50,000 8
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RESP Canada Education Savings Grant 20% of the first $2,500 annual contribution to an RESP for the benefit of child up to the age of 18 paid directly to RESP by government Maximum per beneficiary = $7,200
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This note was uploaded on 11/07/2011 for the course ACCT 470 taught by Professor Dixon during the Spring '11 term at Camosun College.

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IFITC Chapter_9 - Chapter 9 Other Sources of Income and...

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