AFM363 Lecture 9: Module 9

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lemonbeetle804

22 Aug 2019

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM363

Professor

Dan Rogozynski

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Document Summary

Corporate taxable dividend deduction: dividends received by corporations are added into. Division b, then fully deducted in division c. these deductions in division c cannot be carried over, so they should always be deducted immediately. Corporate charitable donations deduction: corporations are permitted a division c deduction for charitable donations, to a limit of 75% of division b income for tax purposes. Unused donations can be carried forward for five years. Donations a re deducted in division c rather than b because they are not a business expense (not an expenditure of money in order to make money). Net capital losses: can be deducted from taxable capital gains to bring those gains to zero. Any excess losses in the yea r, can be carried back three years or forward indefinitely. Non-capital losses: can be deducted against any source of income; can be carried back three years or forward twenty years.

Related Questions

Maxitech is a Canadian company. It has always used a December 31 year end. On January 1, 2016, the company had the following carry forward balances:

- Net Capital Losses 75,600

- Non-Capital Losses 51,400

- Unused Charitable Donations 4,600

During the 2016 taxation year, Maxitech's records show the following results (all amounts are based on the relevant tax rules):

- Net Business Loss 142,000

- Taxable Capital Gains 21,400

- Allowable Capital Losses 6,500

- Charitable Donations 3,200

- Dividends from Taxable Canadian Corporations 30,400

Required: Calculate the Corporation's minimum net income for tax purposes and taxable income for it's 2016 taxation year. Indicate any balances available for carry forward to subsequent years under each of the following assumptions:

A. It is the policy of the company to minimize net capital loss balances prior to using any other type of carry over balance.

B. It is the policy of the company to minimize non-capital losses prior to using any other type of carry over balance.

cerisemole158

Which of the following statements with respect to charitable donations is NOT correct?

Select one:

When making a gift of non-depreciable capital property with a fair market value in excess of its capital cost, it is always advisable to elect the fair market value amount for the gift.

Amounts of eligible donations that are not used during the current year can be carried forward for up to 5 years.

The basis for a charitable donations tax credit for the current year can never exceed 75 percent on the individualâs Net Income For Tax Purposes.

Any capital gain arising on gifts of ecologically sensitive land are deemed to be nil.

KEEP IN MIND THIS IS CANADIAN TAX.

violetleopard989

Which of the following statements is correct with regard tobusiness tax calculation?

		When determining a corporationâs taxable income, all of theexpense items are 100% deductible.
		Net operating losses can be carried back to the past three yearsand carried forward to the next 15 years.
		Alternative Minimum Tax system applies to small companies andlow-income taxpayers.
		Dividend and long-term capital gains usually are levied at aflat tax rate which is comparatively high.

periwinklemule54

AFM363 Lecture 9: Module 9

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