INCOME FROM BUSINESS DEDUCTION RULES

INCOME FROM BUSINESS DEDUCTION RULES - DRAFT INCOME FROM...

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Unformatted text preview: DRAFT INCOME FROM BUSINESS: DEDUCTION RULES F. BARRY GORMAN, PHD, CA, TEP INTRODUCTION PART I DEDUCTION RULES 1. General Principles (a) Expenditures Incurred to Earn Revenue (b) Expenditures Not Capital in Nature (c) Expenditures Not Incurred to Earn Exempt Income (d) Expenditures Not Represent the Annual Value of Property (e) Expenditures Not Personal in Nature (f) Employee Deferred Income Plans (g) Expenditures Must Be Reasonable in the Circumstances (h) Expenditures Must Be Incremental (i) Applicability of GAAP (j) Expenditures Must Be Substantiated (k) Expenditure Categories 2. Expenditures Specifically Not Deductible or Subject to Restriction (a) Reserves or Contingencies (b) Bond Discount (c) Payments on Income Bonds (d) Recreation Expenses (e) Political Contributions (f) Personal Services Business (g) Automobile Allowances (h) Payments Required Under the Income Tax and Excise Tax Acts (i) Interest and Property Taxes on Vacant Land (j) Construction, Renovation or Alteration Period Expenditures (k) Prepaid Expenses (l) Interest Reductions (m) Work Space in the Home (n) Non-Canadian Advertising 3. Expenditures Specifically Deductible (a) Interest (i) General Rule (ii) Specific Rules (b) Costs of Issuing or Selling Units, Interests or Shares (c) Costs of Borrowing Money (d) Annual Fees (e) Life Insurance Premiums (f) Debt Discount on Maturity or Redemption (g) Share Transfer and Other Fees (h) Deductible Reserves (i) Overview 1 (ii) Reserve for Doubtful Accounts (iii) Reserve in Respect of Goods and Services (iv) Reserve for Manufacturers Warranties (v) Amounts Previously Included in Income (vi) Reserve for Amounts Not Due Until a Later Year (i) Bad Debts (j) Pension Fund Contributions (k) Employer Contributions to Profit Sharing Plan (l) Employer Contributions to Deferred Profit Sharing Plan (m) Lease Cancellation Expenses (n) Landscaping (o) Expenses of Representation (p) Site Investigations (q) Utility Connections (r) Inducement Payments (s) Disability Related Building Modifications (t) Conventions (u) Excess Foreign Taxes (v) Health and Dental Premiums for the Self-Employed (w) Scientific Research and Experimental Development Expenditures (i) Overview (ii) Enhanced Write-Off Provisions (x) Food, Beverages, and Entertainment Expenditures (y) Automobile Expenses (z) Fines and Illegal Payments (aa) Unpaid Amounts (bb) Bonuses and Other Unpaid Remuneration PART II EXPENDITURE-RELATED RULES 1. Inventory (a) Inventory Method (b) Inventories of Supplies and Parts (c) Returnable Containers (d) Inventory of Artists (e) Inventory Allowance (f) Conversion of Property to and from Inventory 2. Self-Employed Salespersons 3. Provincial Payroll and Capital Taxes 4. Income Tax Preparation Fees 5. Damages, Losses from Illegal Actions and Similar Amounts PART III NON-CAPITAL LOSS COMPUTATION 2 INTRODUCTION This note outlines the deduction rules found in ITA 18 to 20, ITA 37 and a number of later provisions. A careful reading of these sections reveals that: later provisions....
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This note was uploaded on 01/07/2012 for the course ACCT 4453 taught by Professor Gorman during the Spring '11 term at Dalhousie.

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INCOME FROM BUSINESS DEDUCTION RULES - DRAFT INCOME FROM...

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