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Lecture

ECON 4400 Lecture Notes - Dividend Tax, Accrual, Time Deposit


Department
Economics
Course Code
ECON 4400
Professor
All

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Income from Property 6-1
Definition:
oincome earned from invested capital
othis includes interest income, dividend income, rental income and royalties
ocapital 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:
oa private loan
oCanada Savings Bonds
oGIC or term deposit
omoney in a savings account
oCorporate bonds
omortgage
- 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
oCash received = $120
(Actual dividend)
oTaxable dividend
(Gross-up)
= 120 x 1.25 = 150
oDividend tax credit
2/3 x (150 – 120) = 20
Dividend Income – Eligible
Eligible Dividends have a different tax treatment
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