30 class 44

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Unformatted text preview: lease period plus one renewal period (Minimum 5 years and Maximum 40 years) Class 14 .............................................. Length of life of property Class 17 .............................................. 8% Class 39 .............................................. 25% Class 43 .............................................. 30% Class 44 .............................................. 25% SELECTED PRESCRIBED AUTOMOBILE AMOUNTS Maximum depreciable cost - Class 10.1 Maximum monthly deductible lease cost Maximum monthly deductible interest cost Operating cost benefit – employee Non-taxable car allowance benefit limits - first 5,000 km - balance 39 $30,000 + GST $800 + GST $300 16 cents per kilometre of personal use 41 cents per kilometre 35 cents per kilometre TABLE II 2001 INDIVIDUAL FEDERAL INCOME TAX RATES Income Tax Rate Schedule - Individuals Taxable Income Tax $30,754 or less $30,755 to $61,509 $61,510 to $100,000 $100,001 or more 16% $ 4,921 + 22% on next $30,754 $11,687 + 26% on next $38,490 $21,694 + 29% on remainder SELECTED NON-REFUNDABLE TAX CREDITS PERMITTED TO INDIVIDUALS FOR PURPOSES OF COMPUTING INCOME TAX The tax credits are 16% of the following amounts: Basic personal amount Married and equivalent to spouse amount Net income threshold for married or equivalent amount Age 65 or over in the year Disability amount Disabled dependents who reach 18 in the year Net income threshold for disabled dependents 18 and over Basic amount for: Age credit, child tax benefit, and GST credit OAS clawback $7,412 6,293 630 3,619 6,000 3,500 4,966 26,941 55,309 CORPORATE FEDERAL INCOME TAX RATE The tax payable by a corporation under Part I of the Income Tax Act on its taxable income is 38% before any additions and/or any deductions. PRESCRIBED INTEREST RATES Year 2001 2000 1999 1998 1997 Jan. 1 - Mar. 31 8 7 7 6 6 Apr. 1 - June 30 8 8 7 7 5 July 1 - Sept. 30Oct. 1 - Dec. 31 7 8 7 7 6 7 8 7 7 6 The rate is 2 percentage points higher for late or deficient income tax payments and unremitted withholdings. The rate is 2 percentage points lower for deemed interest on employee and shareholder loans. 40 Introduction The solutions outlined in the following material represent comprehensive approaches to questions and are based on the full range of available marks. They do not represent responses that candidates could realistically expect to produce in the prescribed time limits. The solutions provide examples of how issues can be dealt with and do not represent the only acceptable responses. References to sections of the CICA Handbook, the Income Tax Act and the Rules of Professional Conduct have been included solely to assist candidates in their review. 41 DAY 1 QUESTION 1 (8 marks 2 marks each) Multiple Choice (i) The correct response is (b). CICA AcG-13, Hedging Relationships, paragraph 6, provides that a hedging relationship qualifies for hedge accounting only when certain conditions exist. These conditions include the designation of the hedge at the inception of the hedging relationship, that there be documentation, and that there be reasonable assurance that the relationship will be effective. Answer (b) indicates that hedge accounting is optional with some conditions so it is the best answer. (a) and (c) are incorrect since they both say that hedge accounting is required. (d) is incorrect since it says that hedge accounting is optional but does recognize that certain conditions must be met, other than the designation of the hedge. (ii) The correct response is (b). (CICA 3055, Appendix, Situation 1) The calculation is as follows: 30% of the fair value of $30,000 $9,000 less the portion of the gain on transfer related to Company A. The gain on transfer of the building is $30,000 – 24,000 = $6,000 and 30% (1,800) $7,200 Accumulated amortization (30,000/3 = 10,000 per year *30% 3,000 Less the portion related to gain eliminated (600) (2,400) $4,800 (a) is incorrect because it does not adjust the gain for amortization. See $600 above. (c) is incorrect because it simply takes 30% of the building after one year of amortization. ($30,000 – 10,000) * 30% = $6,000. (d) is incorrect as it does not calculate amortization to December 31, 2002. (iii) The correct response is (d). (CICA 9200). This is the correct response as there is no guidance to modify (qualify, etc) the Notice to Reader communication. Paragraph 9200.18 points out that (a), (b) and (c) are appropriate actions. (iv) The correct response is (b). (CICA 5210). This is the correct response as it is not acceptable to set the control risk below maximum if the policies and procedures do not address the assertions or are unlikely to be effective. In that case the control risk should be assessed at the maximum, which is why (a) is not the correct answer. (CICA 5210.10). (c) is incorrect since it is acceptable to set the control risk at the maximum for the sake of efficiency. (CICA 5210.11 and .12). (d) is incorrect as it is acceptable to set the control risk below maximum if the...
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This note was uploaded on 10/27/2013 for the course LAW 10-100 taught by Professor Parsons during the One '10 term at Bond College.

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