AFM202 Chapter Notes - Chapter 4: Property Income, Capital Expenditure, Net Income

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM202
• Professor: Alan Mc Naughton

Document Summary

Net income for tax purposes: net income. Income less permitted deductions from income: employment income, business and property income, capital gains, other income and deductions, taxable income is multiplied by the appropriate tax rate(s) to determine taxes payable, tax credits reduce taxes payable. Includes revenue that is earned but not yet received: expenses incurred but not yet paid are deductible from net income for tax purposes. Included in income using accrual accounting rules, except compound interest expense: must be paid in the taxation year. Property: all assets including intangible assets and rights to acquire assets: capital gains and capital losses are excluded from the computation of income from property, expenses to earn capital gains are not deductible. Typical expenses that may be deducted from property income: Investment counsel fees: accounting and tax return preparation fees, expenses related to owning a rental property. Legal fees paid in a year related to an objection or appeal of a cra notice of assessment.