AFM362 Chapter Notes - Chapter 4: Property Income, Passive Income, Capital Gain

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM362
• Professor: Ori Friedman

Document Summary

Distinguishing types of income: when a taxpayer disposes property, the proceeds minus the cost will result in either, capital gain or loss. Income or loss from a business or property: when a taxpayer purchases and holds property to earn income. Business income versus capital receipt: business income receipts are fully taxed and capital receipts are partially taxed as capital gains, current inclusion rates of capital gains is 50% Reasons for distinction between business and property income: property income earned by an individual is considered a return on equity, or passive income, besides rental income, is excluded from earned income calculated in determination of rrsp limit. Income attribution rules apply only to non-arm"s length transfer of property income and not to the transfer of business income: non-resident taxpayers are taxed on income from a business carried on in canada. Income from property is subject to a withholding tax under a different part of the act.