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ECON 4400
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Income from Property 6-1 Definition: o income earned from invested capital o this includes interest income, dividend income, rental income and royalties o capital gains are not considered to be income from property Interest Income 6-2 - this is income earned from money put on deposit at a bank, or loaned to another person or corporation - Interest can be earned from: o a private loan o Canada Savings Bonds o GIC or term deposit o money in a savings account o Corporate bonds o mortgage - Interest income is taxable when receive Interest Income 6-3 - Interest income is also taxable on a modified accrual basis for individual taxpayers - This rule states that interest income must be recorded (accrued) at each anniversary date of the investment (less any interest previously recorded when received) Dividend Income Non –Eligible - Dividends are cash received from the ownership of shares - These are taxed in an unusual way o Cash received = $120 (Actual dividend) o Taxable dividend (Gross-up) = 120 x 1.25 = 150 o Dividend tax credit 2/3 x (150 – 120) = 20 Dividend Income – Eligible Eligible Dividends have a different tax treatment - Cash received = $120 - Taxable dividend
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