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CTP13_Chapter_11

2014 clarence byrd inc 44 canadian tax principles

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Unformatted text preview: les Charitable Donations • General Rules – 15%(1st $200) + 29% Of Excess Copyright © 2014, Clarence Byrd Inc. 46 Canadian Tax Principles Charitable Donations • General rules – Limit: 75% of net income – 100% of net income in individual’s year of death and preceding year year year Copyright © 2014, Clarence Byrd Inc. 47 Canadian Tax Principles Gifts Of Capital Property • • If FMV > ACB, Taxpayer Can Elect Any Value Between FMV If And ACB For Purposes Of Determining The Credit And Base For Charitable Donations Of Capital Property: – 75% Of Net Income For The Year; Plus – 25% Of Any Taxable Capital Gain Resulting From Gift; Plus – 25% Of Any Recaptured CCA Resulting From Gift Copyright © 2014, Clarence Byrd Inc. 48 Canadian Tax Principles Gifts Of Capital Property • Example – Gift Has FMV = $100,000; Cost = $80,000; UCC = $50,000 Cost – Taxable Capital Gain = $10,000 – Recapture = $30,000 – Net Income = $40,000 • Usual Limit = $30,000 [(75%)($40,000)] • Extra $10,000 [(25%)($10,000 + $30,000)] Eliminates Extra TCG And Recapture TCG Copyright © 2014, Clarence Byrd Inc. 49 Canadian Tax Principles Gifts Of Capital Property An asset with an ACB of $100,000 and a FMV of $200,000 is gifted An to a charity to Elect $200,000 Credit = [(15%)($200) + (29%)($199,800)] Less Tax = [(29%)(1/2)($100,000)] Net $57,972 14,500 $43,472 Elect $100,000 Elect Credit = [(15%)($200) + (29%)($99,800)] Less Tax Net Net $28,972 Nil $28,972 $28,972 Savings ($43,472 - $28,972) Savings $14,500 Copyright © 2014, Clarence Byrd Inc. 50 Canadian Tax Principles Charitable Donations • General Rules – Carry Forward: 5 Years – Subject To The Same Limitations In Carry Forward Years Copyright © 2014, Clarence Byrd Inc. 51 Canadian Tax Principles Charitable Donations – No Capital Gain • Publicly Traded Securities • Ecologically Sensitive Land • Canadian Cultural Property – Recipients • Registered Charities • Amateur Athletic Associations • United Nations • Universities • Foreign (If Canadian Government Contributes) Copyright © 2014, Clarence Byrd Inc. 52 Canadian Tax Principles Shares Acquired With Options • The Problem – The net gain is a combination of employment income and a The Taxable Income deduction Taxable • The Solution – Donated Within 30 Days Of Acquisition – Get Extra 50 Percent Deduction Copyright © 2014, Clarence Byrd Inc. 53 Canadian Tax Principles Foreign Tax Credits • Basic Concept: Include Full Amount In Income And Get Credit Basic For Foreign Withholding For • Receive $850 After Withholding Of 15% • Tax On $1,000 At 45% = $450 • Tax After Credit = $450 - $150 = $300 • Tax Paid = ($150 + $300) = $450 • Same As If Earned In Canada And Taxed At 45% Copyright © 2014, Clarence Byrd Inc. 54 Canadian Tax Principles Foreign Non-Business Tax Credit Credit Equals The Lesser Of: • Actual Withholding (Limited To 15 Percent) • Net Foreign Non-Business Income X Tax Otherwise Adjusted Net...
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