AFM121 Chapter Notes - Chapter 25: Capital Gain, Life Annuity, Deferral

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM121
• Professor: John D' Amato

Document Summary

Taxes and taxation issues: proper tax planning should be incorporated in all financial plans but it should not be the overriding objective. Legitimate and effective tax avoidance measures: full utilization of allowable deductions, conversion of non-deductible expenses into deductible expenditures, postponing receipt of income, splitting income with family members, selecting investments that provide better after-tax yields. Income tax act (ita) governs federal income taxes: provinces have separate laws, canada imposes taxes on all income (domestic and foreign) earned by residents (individual or corporate) and foreign companies with management and control in canada. Individuals and corporations must calculate income and pay taxes annually. Individuals must use the calendar year, corporations can choose any fiscal year- end, as long as it is used consistently. Income is treated differently, depending on its source: employment income is taxed on a gross receipt basis, individuals can not deduct related costs in earning this income.