Acco340Lecture 2-3 - Employment Income

Plus ita 81i for other expenses and ita 81j for motor

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plus ITA 8(1)(i) for other expenses , and    ITA 8(1)(j)  for  motor vehicle CCA and interest  (available to all employees)  The advantage of claiming under these general  sections is because the deduction is not limited up to general employment income ,  as is the case for ITA  8(1)(f) deductions that are limited up to commissions income. See Self Study problem Three-8 for a detailed example of the restrictions and maximizing deductions However,   under the strategy of not utilizing ITA 8(1)(j), home office expense will be claimed under ITA 8(1)(i)  which  does not allow the deduction of home office insurance premiums and property taxes  . Also  ITA8(1) (i)  provides for a limited amount of other expenses, such items as   promotional expenses, entertainment and  meals   not consumed while        travelling permitted under ITA8)1)(f),       will not be deductible   under ITA8(1)(i Note: meals consumed while traveling could be claimed under ITA 8(1)(h) as travel expense.                                                                               3. TRAVELING -ITA 8(1)(h) & MOTOR VEHICLE COSTS – ITA 8(1)(h.1)- FOR ALL EMPLOYEES     ITA 8(1)(h)  provides deductibility, for all employees , of  travel costs , which includes accommodations, airline or rail  tickets, taxi fares, and meals. Note: - meals are only deductible (at 50%) if incurred away from employer’s office at least 12 hours           -meals or entertainment expenses, incurred while travelling,  even if incurred to earn employment are             not deductible under   ITA 8(1)(h)  -  these expenses are only allowed under 8(1)(f) for salespersons). ITA   8(1)(h.1)   provides   for   deductibility   of   motor   vehicle   operating   costs   eg.   fuel,   maintenance,   normal   repairs,  insurance, licensing fees (no CCA or loan interest on car purchase) if employees are carrying out employment duties.  These deductions, if allowed, can offset all employment income and other income earned in a current year Excess deductions creating employment losses are subject to the usual carry over provisions of  non-capital losses (ie. back 3 years; forward 20-years for losses after 2005).
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Note:  Salesperson must decide on whether these type of expenses will yield greater deductions under ITA 8(1)(h) and  (h.1) where there is no overall limit (ie. commission income) or under ITA 8(1)(f), where there is a limit.
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  • Fall '10
  • Mastromonaco
  • Quebec, taxable benefit, ITA, employee taxable benefit

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