Acco340Lecture 2-3 - Employment Income

O must be for non reimbursed expenses that are

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Crown and federal governments. o must be for  non-reimbursed   expenses that are eligible for an income tax deduction against employment or  partnership income eg. Non-reimbursed professional membership dues paid by individual which includes GST . o eligible expenses exclude  expenses for which a non-taxable allowance was received and those supplies on which  GST did not apply (eg. purchases that are zero-rated, exempt, or outside Canada, etc.)GST Rebates received on  expenses other than CCA will be included in income in the year received .  GST Rebates received on CCA, will  reduce the capital cost of the relevant asset, in the year received , thus reducing future CCA deductions.                                                             GST REBATE IMPACT ON INCOME TAX Year 1               GST Paid                                                                                       $100                         (embedded in the expenses deducted under ITA8)                         Taxes saved ($100 X 50%)                                                                (50)                                                      After-Tax  Cost                                                                                                       $50                                                 GST Rebate Requested as per Tax return of Year 1 filed in Year 2       $100 Year 2            GST Rebate Received in Year 2 –Taxable income                                 $100                       Taxes Payable ($100 X 50%)                                                                 (50)                        After-Tax  Income                                                                                                   $50
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                                                                                NET IMPACT OVER THE 2 YEARS                    0 Essentially, as is normally the case for persons engaged or deemed to be engaged in a  commercial  activity subject to the GST( ie ,not an end-user), the GST is a flow-through item that only affects the  timing of cash flows.
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  • Fall '10
  • Mastromonaco
  • Quebec, taxable benefit, ITA, employee taxable benefit

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