BUSI 4005 Lecture Notes - Lecture 8: Net Income, Election 2
28 May 2018
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1. Vendor
i. Share
Proceed – ACB = CG
TCG-CG deduction = taxable income
Cg deduction
- unused lifetime deduction limit
- annual gain limit
- cumulative gain limit
proceed – income tax paid by shareholder = net fund
received after tax
ii. Asset
1. Proceed – liability – income tax paid-PUC= deemed
div
2. Deemed div – capital div = wind up deemed dividend
3. Proceed – deemed div – ACB = CG
4. Net fund receive = fund available – CG- deemed
dividend
5. Consider tax free payment from CDA before sale
a. Recalculate minimum share price + CDA
balance and solve price
b. Get minimum acceptable price for selling
2. GST
a. Taxable supply of service rendered by vendor
b. Lease/ license
c. Purchaser not registrant
d. Can elect to have no GST apply on sale if > 90% of property needed
to carry on business
3. CG deduction
a. 800K + lifetime CG exemption
i. 1 million on CG disposition of farm and fishing property
ii. 835,716 on CG disposition QSBC share
4. QSBC share test
a. SBC test
i. CCPC
ii. Ownership: individual/ spouse/ partnership
iii. More than 90% asset use in active business
iv. Connected share/ debt
b. Holding period
i. 24 month own by only individual
c. Basic asset
i. 24 month
ii. more than 50% of FMV asset use in CAD
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