IntroToITA - DRAFT AN INTRODUCTION TO THE INCOME TAX ACT F....

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DRAFT AN INTRODUCTION TO THE INCOME TAX ACT F. BARRY GORMAN, PhD, CA, TEP INTRODUCTION PART I — READING THE INCOME TAX ACT 1. Overview 2. Authoritative Literature (a) Income Tax Act (b) Jurisprudence (c) Interpretation Bulletins (d) Information Circulars (e) Technical News (f) Tax Rulings (g) Tax Reporting Services (h) Canadian Tax Foundation (i) Other Sources 3. Part I of the Income Tax Act 4. Division B 5. “Good” Tax Law 6. Reading the Act (a) Technical Notation in the Act (b) Interpretation of the Law (c) General Provisions Versus Specific Provisions (d) Exceptions to General Provisions (e) Definitions (f) History (g) Gender (h) GAAP and the Act (i) Extra-Statutory References (j) Assessing Policy and the Act 7. Approach to Researching Tax Problems 8. Substance or Form of a Transaction PART II — WHO IS LIABLE FOR INCOME TAX? WHAT IS THE TAX BASE? 1. Liability for Income Tax 2. Income Tax Base 3. Overview of the Computation Process 4. Computation of Income 5. Section 3 Framework – Net Income for Tax Purposes 6. Computation of Taxable Income 1
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7. Computation of Taxes Payable (Personal and Corporation) 8. Deductions in the Act PART III – OUTLINE OF THE INCOME TAX ACT 1. What is the Purpose of This Legislation? 2. Who is Taxable? 3. Aggregation Formula 4. What is Taxable? What do Taxpayers Have to Report? 5. Rules Related to the Computation of Income 6. Amounts Which are Not Taxable 7. Deductions From Net Income For Tax Purposes 8. What do Taxpayers Have to Pay? PART IV - PRINCIPAL DIFFERENCES BETWEEN TAX PROBLEMS AND FINANCIAL ACCOUNTING PROBLEMS TAXATION IS 2
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1. The law, which means your principal reference is the Income Tax Act . Ensure that you read the Act as we proceed through the course. Reliance on the text will be insufficient for a full grasp of tax law. 2. A controllable cost, in that taxpayers can arrange their affairs so as to pay the least amount of tax, or to some extent influence the amount of taxes they pay. The planning decision is: How can individuals and corporations plan their activities so as to reduce the impact of taxation on their personal, business, or investment decisions? 3. For individuals, and many corporations, their largest annual expenditure. 4. Not memorizable. Rather, your approach is to learn the basic principles rather than memorize the tens of thousands of “what if” scenarios. 5. Neither fair, just, nor equitable. 6. Like learning to ride a bicycle, tax is initially challenging. However, after making numerous mistakes you will gradually grasp the material. 7. A legal issue. 3
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INTRODUCTION This note provides an overview of (i) the sources of authoritative literature related to tax law, (ii) the structure of the Income Tax Act , (iii) useful information to assist students when reading the legislation and solving assignment problems, and (iv) the structure of the computations required when solving tax problems. PART I
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IntroToITA - DRAFT AN INTRODUCTION TO THE INCOME TAX ACT F....

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