2%20Procedures%20and%20Administration

Year at the end of each month 2 112 of the tax

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year, at the end of each month 2) 1/12 of the tax payable for the immediately preceding year, at the end of each month 3) 1/12 of tax payable in second preceding year, for 2 months, followed by 1/10(the amount by which tax payable in the immediately preceding year exceeds the first two instalments) for 10 months Select method that results in lowest payment amount. Generally 3 rd if income is increasing
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Instalments Corporations Example Following are amounts of net tax owing: 2005 $108,000 2006 $138,000 2007 $162,000 estimated Method 1 Method 2 Method 3 Complete Exercise Two-7 and 8 on pg. 49 Complete Self Study Problem Two-2 and 3 on pg. 65-66
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Installments Small corporations Small CCPC’s are permitted to pay installments on a quarterly basis A small CCPC is one which: Has taxable income of $500,000 for current or preceding tax year; Taxable capital employed in Canada for the associated group ≤ $10 million for current or preceding year; The company claimed the small business deduction in the current or preceding year; A perfect compliance record has been maintained for all taxes (GST, corporate and source deductions) for the previous 12 months Complete Exercise Two-9 on pg. 49
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Installments Small corporations Each installment is payable by the end of each fiscal quarter year. There are three calculation methods allowed: 1. 25% of estimated tax payable for the current taxation year 2. 25% of the tax payable for the immediately preceding taxation year 3. First installment: 25% of tax payable in second preceding taxation year Following three installments 33% of amount by which taxes paid in the immediately preceding year exceeds the first installment
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Returns and Payments - Trusts Must file each taxation year, on prescribed form T3, within 90 days of the taxation year end of the trust. Testamentary trusts created on death. Inter vivos trusts trust created by living person, or by reason other than death.
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Foreign Reporting Requirements Canadian residents are liable for tax on world wide income. As there is no formal way for the CRA to know about foreign income, Canadian residents may be tempted to fail to report it. Therefore, if you have foreign property with a cost of over $100,000, you have to file form T1135 to verify foreign income
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Foreign Reporting Requirements Must report: Funds in foreign bank accounts Shares in non-resident corporations Land and building located outside Canada (other than personal use property) Interests in foreign mutual funds Debts owed to residents by non residents Partnership interests Patents, copyrights, or trademarks held outside Canada.
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Administration of the Income Tax Act Refunds Books and Records Assessments Adjustments to returns Appeals process Tax evasion, avoidance and planning Collection and enforcement
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Refunds Refunds are normally forwarded to the taxpayer by the CRA without any action on the part of the taxpayer.
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