RSM324H1 Chapter Notes - Chapter 7: Foreign Tax Credit, Property Income, Dividend Tax
Document Summary
Property income is the annual or regular return received for allowing another party to use one"s property. Does not include the gain or loss that may result from the sale of that property. To qualify as property income, interest must be earned in a relatively passive way, without the commitment of significant time, labour, and attention by the owner. An exception permits the deduction of interest expense if the loan was incurred to acquire property that is used to generate property income. Interest on loans used to purchase investments is deductible against the interest, dividends, and rental income earned. The compensation received for the use of borrowed funds. If the extra principal amounts to more than normal interest, such amount is usually treated as a capital gain. All corporations, private and public, must recognize income according to the normal rules for profit determination and do so on an accrual basis.
