ACTG 6730 Lecture Notes - Lecture 1: Tax Rate, Tax Avoidance, Dividend Tax
13 May 2018
School
Department
Course
Professor
Week 1: Managerial Tax Planning
(1-ta) < (1-tb)
A should always be paying the non-deductible expenses because of larger income
A should own the dead weight assets (non-income producing assets i.e. jewelry)
B should own the income producing assets i.e. bonds
Under family law, you have to put a value on jewelry
• observant of the gold price index
Transfer means sale, gift or lend
Interest income
• if material, then for individuals, interest payments are due every quarters; for
corporations, they are due every month
$1(1+r)n
$1(1+r(1-t))n
Here, we are paying taxes at the same time we are earning interest
If we charge higher than the benefit that the taxpayer receives, then there will be serious
consequences i.e. lose your CPA
Do’t use deials; use whole uers for calculation purposes
Compliance work is being outsourced to different countries
• Deloitte and India
• PwC and London, ON
Planning is becoming more lucrative
Tax professionals are usually paid the highest hourly rate, and this is consistent throughout the
entire year
Example
Income in Ontario: $150,000 @40%
Income in Florida: $200,000 @30%
200,000 (40% - 30%) = 20,000
Objective of tax planning is not to minimize taxes; it is to maximize after-tax income
Foreign dividends would be taxed as interest income
Main incentive for dividend tax credit is for integration purposes
Registered plans are also incentives (i.e. RRSP, RESP)
Jurisdictional income splitting: having income in Alberta vs. the Maritimes because of the lower
tax rate
Ability to convert higher taxed income into lower taxed income
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Week 1: managerial tax planning (1-ta) < (1-tb) A should always be paying the non-deductible expenses because of larger income. A should own the dead weight assets (non-income producing assets i. e. jewelry) B should own the income producing assets i. e. bonds. Under family law, you have to put a value on jewelry: observant of the gold price index. Interest income if material, then for individuals, interest payments are due every quarters; for corporations, they are due every month. Here, we are paying taxes at the same time we are earning interest. If we charge higher than the benefit that the taxpayer receives, then there will be serious consequences i. e. lose your cpa. Do(cid:374)"t use de(cid:272)i(cid:373)als; use whole (cid:374)u(cid:373)(cid:271)ers for calculation purposes. Compliance work is being outsourced to different countries: deloitte and india, pwc and london, on. Tax professionals are usually paid the highest hourly rate, and this is consistent throughout the entire year.
