RSM324H1 Chapter Notes -Tax Deduction, Pension, Net Income
Document Summary
Determined by adding salaries/wages, benefits and allowances less deductions that are permitted. If an item is non-taxable/deductible, you deduct it from net income. If an item is taxable/non-deductible, you add it back to net income. Wages are only taxable in the year that they are received. Deferred bonuses are beneficial to the employee only when interest payments are being made on the bonus or if the future tax rate is lower than the current one. Deferred bonuses are beneficial to the employer because they don"t have to pay right away so increased cash flow; a disadvantage because the employer will not be able to claim the tax deduction until later. General rule: employee must include any benefits received as part of their employment income with some exceptions; items that are hard to value or insignificant are not taxable. >employer contributions to a deferred profit sharing plan (dpsp) >employer contributions to a pooled registered pension plan.
