This course builds on concepts learned in introductory financial accounting and microeconomics and in the study of the fundamentals of the Canadian Income Tax System with respect to corporations. In this course, students are introduced to the principles and practice of taxation and related tax planning for corporations and provided with a basic understanding of the Canadian Income Tax Act. Topics covered include the identification of sources of income and how they are taxed, the computation of net income, taxable income and taxes payable for corporations resident in Canada, and the impact of taxation on business decision-making for corporations.
Student Audience:
The predominant audience for this course is undergraduate accounting majors who are in a degree or diploma program. Accounting Majors typically take a sequence of courses beginning with Financial Accounting, followed by Intermediate Financial Accounting, Management Accounting, and then Taxation.
Course-Level Assessment Project: Computation of Taxes Payable and Providing Tax Planning Advice to a Corporate Client
Milestone(s):
Milestone 4.1: Administrative Policies, Computation of GST/HST and Determining Residency
Explain income tax administration rules for corporations Compute the liability for GST and HST Identify the underlying principles of the income tax system in Canada
Milestone 7.1: Computation of Net Income for a Corporation
Compute net income for a corporation taxpayer resident in Canada, determined per Section 3 of the ITA
Compute Capital Cost Allowance (CCA) deductions Use the ITA to determine an corporation's net income and deductions from various sources
Milestone 10.1: Computation of Taxable Income & Taxes Payable for a Corporation
Compute taxable income and Federal taxes payable for a corporation Use the ITA to determine tax implications of associated corporations Use the ITA to determine tax implications of affiliated and/or related taxpayers Use the ITA to determine refundable taxes for a corporation
Milestone 12.1: Tax Planning Advice and Corporate Reorganizations
Apply the principles of income taxation to tax planning decisions for corporations Explain the mechanics of corporate reorganizations
Explain income tax administration rules for corporations
Presented: Topic 1: Administrative Rules
Describe the filing requirements for corporations Describe the interest and penalties applicable for corporations Compute tax instalments for corporations Describe the assessment process for corporations Describe the appeal process for corporations
Topic 2: Tax Planning, Tax Avoidance and Tax Evasion
Describe tax planning, tax avoidance and tax evasion Describe the general anti-avoidance rule as per section 245 of the ITA
Assessed: Assignment 1.1: Tax Theory
Describe the filing requirements for corporations Describe the interest and penalties applicable for corporations Compute tax instalments for corporations Describe the assessment process for corporations Describe the appeal process for corporations Describe tax planning, tax avoidance and tax evasion Describe the general anti-avoidance rule as per section 245 of the ITA
Discussion 1.1: Introductions Discussion 1.2: GAAR in Court
Describe the general anti-avoidance rule as per section 245 of the ITA
Quiz 1: Quiz 1.1
Describe the filing requirements for corporations Describe the interest and penalties applicable for corporations Compute tax instalments for corporations Describe the assessment process for corporations Describe the appeal process for corporations Describe tax planning, tax avoidance and tax evasion
Describe the general anti-avoidance rule as per section 245 of the ITA
Supplemental Assignment 1.1: The Theory of Tax
Describe the filing requirements for corporations Describe the interest and penalties applicable for corporations Compute tax instalments for corporations Describe the assessment process for corporations Describe the appeal process for corporations Describe tax planning, tax avoidance and tax evasion Describe the general anti-avoidance rule as per section 245 of the ITA
Reading: Byrd & Chen's Canadian Tax Principles, 2016-2017 Edition
Chapter 2, "Procedures and Administration"
Assessment Notes: Assignment 1.1: Theory questions related to administrative rules for corporations Supplemental Assignment 1.1: Alternative theory questions related to administrative rules for corporations Discussion 1.1: Introductions Discussion 1.2: GAAR in Court Readings: Byrd & Chen 2014-15 Edition Chapter 2 – sections, "Returns and Payments – Corporations" (2-60 to 2-79), "Books and Records", "Assessments and The CRA My Account Service", "Refunds", "Adjustments to Income Tax Returns", "Disputes and Appeals", "Tax Evasion, Avoidance and Planning" , "Collection and Enforcement" and "Taxpayer Relief Provisions" (2-85 to 2-152
Notes: Updates: required for changes in interest and penalty rates, linked to updated document CPA competencies:
6.1.1 Assesses a corporate entity's general tax issues o General Concepts and Principles of Taxation
(b) General anti-avoidance rule (C) 6.3.1 Advises taxpayers with respect to assessment, notice of objection, and appeals
o General Concepts and Principles of Taxation (c) Filing deadlines and requirements (B) (d) Notice of assessments and appeal process (C)
Define taxable supplies for GST/HST purposes Describe the administrative rules related to GST/HST Describe the GST/HST collection and remittance process
Topic 2: Computing Tax Credits
Define zero rated supplies for GST/HST purposes Define exempt supplies for GST/HST purposes Define input tax credits (ITC’s) Compute the liability for GST/HST
Assessed: Assignment 2.1: GST/HST Calculations
Compute the liability for GST/HST
Discussion 2.1: GST implications
Define zero rated supplies for GST/HST purposes Define exempt supplies for GST/HST purposes Define input tax credits (ITC’s) Compute the liability for GST/HST
Quiz 2: Quiz 2.1
Define taxable supplies for GST/HST purposes Describe the administrative rules related to GST/HST Describe the GST/HST collection and remittance process Define zero rated supplies for GST/HST purposes Define exempt supplies for GST/HST purposes Define input tax credits (ITC’s) Compute the liability for GST/HST
Reading: Byrd & Chen's Canadian Tax Principles, 2016-2017 Edition
Chapter 21, "Goods and Services Tax"
Assessment Notes: Assignment 2.1: Compute the liability for GST/HST for a business in several scenarios Supplemental Assignment 2.1: Compute the liability for GST/HST for a business in several scenarios Discussion 2.1: Determine GST implications for income tax purposes with examples Readings: Byrd & Chen 2014-15 edition Chapter 21, entire chapter
Lesson 3: The Canadian Tax System and Structure of the Income Tax Act
Outcomes:
Identify the underlying principles of the income tax system in Canada
Presented: Topic 1: Tax Systems
Describe how each of the fundamentals are incorporated in the income tax system in Canada Describe the underlying objectives of the income tax system in Canada Describe the role and functions of Federal government departments in the income tax system
Topic 2: The Income Tax Act (ITA)
Describe the structure of the Income Tax Act (ITA) Identify the sections of the ITA that apply to each source of income Interpret the purpose of sections of the ITA legislation Describe other information sources beyond the ITA
Assessed: Assignment 3.1: The ITA
Describe how each of the fundamentals are incorporated in the income tax system in Canada Describe the underlying objectives of the income tax system in Canada Describe the role and functions of Federal government departments in the income tax system Describe the structure of the Income Tax Act (ITA) Identify the sections of the ITA that apply to each source of income Interpret the purpose of sections of the ITA legislation Describe other information sources beyond the ITA
Assignment 3.2: Federal Government Departments
Describe the role and functions of Federal government departments in the income tax system
Discussion 3.1: Tax Policy
Describe how each of the fundamentals are incorporated in the income tax system in Canada Describe the underlying objectives of the income tax system in Canada
Describe how each of the fundamentals are incorporated in the income tax system in Canada Describe the underlying objectives of the income tax system in Canada Describe the role and functions of Federal government departments in the income tax system Describe the structure of the Income Tax Act (ITA) Identify the sections of the ITA that apply to each source of income Interpret the purpose of sections of the ITA legislation Describe other information sources beyond the ITA
Supplemental Assignment 3.1: The Income Tax Act
Describe how each of the fundamentals are incorporated in the income tax system in Canada Describe the underlying objectives of the income tax system in Canada Describe the role and functions of Federal government departments in the income tax system Describe the structure of the Income Tax Act (ITA) Identify the sections of the ITA that apply to each source of income Interpret the purpose of sections of the ITA legislation Describe other information sources beyond the ITA
Reading: Byrd & Chen's Canadian Tax Principles, 2016-2017 Edition
Chapter 1, "Introduction to Federal Taxation in Canada"
Assessment Notes: Readings: Chapter 1, Sections 1-1 to 1-76 Discussion 2.1: Tax policy – what are the underlying objectives of the income tax system in Canada? Are some policies emphasized more than others? How does the debate over progressive vs. flat tax rates fit in with Canada's overall objectives for the income tax system in Canada? Assignment 2.1: Worksheet: Theory questions, including questions related to interpreting certain terminology in the ITA and describing the basic structure of the ITA Assignment 2.2: Compare the role and functions of the Department of Finance, the Department of Justice and Canada Revenue Agency Supplemental Assignment 2.1: Worksheet: Alternative theory questions, including questions related to interpreting certain terminology in the ITA and describing the basic structure of the ITA Possible Activity: Mark the ITA (Can students annotate a PDF document without special software?)
Compute net income for a corporation taxpayer resident in Canada, determined per Section 3 of the ITA
Presented: Topic 1: Liability for Income Tax
Interpret the “Charging Provision”
Topic 2: Canadian Residency Requirements
Describe the sources of income for a corporation resident in Canada Apply the deemed and common-law resident definitions to corporations Recognize corporations that are non-residents
Topic 3: Section 3 of the ITA
Apply the format of section 3 of the ITA to the computation of net income for a corporation resident in Canada
Describe the definition of resident Define a Canadian Controlled Private Corporation (CCPC)
Assessed: Assignment 4.1: S.3 of the ITA
Apply the format of section 3 of the ITA to the computation of net income for a corporation resident in Canada
Assignment 4.2: Resident Case Studies
Describe the definition of resident Apply the deemed and common-law resident definitions to corporations Recognize corporations that are non-residents
Discussion 4.1: Common-law Residence
Describe the definition of resident Apply the deemed and common-law resident definitions to corporations Recognize corporations that are non-residents
Interpret the “Charging Provision” Describe the definition of resident Apply the deemed and common-law resident definitions to corporations Recognize corporations that are non-residents Apply the format of section 3 of the ITA to the computation of net income for a corporation
resident in Canada Describe the sources of income for a corporation resident in Canada Define a Canadian Controlled Private Corporation (CCPC)
Supplemental Assignment 4.1: Section 3 of the ITA
Apply the format of section 3 of the ITA to the computation of net income for a corporation resident in Canada
Reading: Byrd & Chen's Canadian Tax Principles, 2016-2017 Edition
Chapter 1, "Introduction to Federal Taxation in Canada" Chapter 20, "International Issues in Taxation"
Course-Level Assessment Milestone 4.1: Administrative Policies, Computation of GST/HST and Determining Residency
Explain income tax administration rules for corporations Compute the liability for GST and HST Identify the underlying principles of the income tax system in Canada
Assessment Notes: Assignment 4.1: Several independent case studies calculating net income according to S.3 of the ITA Assignment 4.2: Several independent resident case studies Supplemental Assignment 4.1: Several independent case studies calculating net income according to S.3 of the ITA Discussion 4.1: Analysis of court cases to determine how the Canadian courts have interpreted "common-law residence" and the court precedent established.
Describe the fundamentals of the Capital Cost Allowance (CCA) system in Canada
Topic 2: Computation of CCA Deductions and UCC Balances
Compute the CCA deduction and UCC Balances
Topic 3: Cumulative Eligible Capital (CEC) Theory
Describe the fundamentals of the Cumulative Eligible Capital (CEC) system in Canada
Topic 4: Computation of CEC Amounts and Balances
Compute the CEC amount and closing balance of the CEC account
Assessed: Assignment 5.1: Calculating CCA and CEC
Compute the CCA deduction and UCC Balances Compute the CEC amount and closing balance of the CEC account
Discussion 5.1: Stimulating the Economy with Tax Policies
Describe the fundamentals of the Capital Cost Allowance (CCA) system in Canada
Quiz 5: Quiz 5.1
Describe the fundamentals of the Capital Cost Allowance (CCA) system in Canada Compute the CCA deduction and UCC Balances Describe the fundamentals of the Cumulative Eligible Capital (CEC) system in Canada Compute the CEC amount and closing balance of the CEC account
Supplemental Assignment 5.1: CCA and CEC Calculations
Compute the CCA deduction and UCC Balances Compute the CEC amount and closing balance of the CEC account
Reading: Byrd & Chen's Canadian Tax Principles, 2016-2017 Edition
Chapter 5, "Capital Cost Allowances and Cumulative Eligible Capital"
Assessment Notes: Assignment 5.1: Case study with multiple calculations of CCA and CEC Supplemental Assignment 5.1: Alternate case study with different fact pattern and numbers Discussion 5.1: Use of tax policy to stimulate certain industries or economy (Class 29 vs 43, Class 45 vs. 50 vs. 52) Readings: Byrd & Chen, 2014-15 Edition Chapter 5 (entire chapter)
Notes: This lesson will be identical to Lesson 5 in Tax 1 Updates: Occasional Changes Additional Notes: CEC may be going away in 2015. Double-check before course release. CPA Competencies:
6.1.1 Assesses a corporate tax entity's general tax issues 6.1.2 Determines income taxes payable for a corporation in routine situations
o (b) Capital Cost Allowance (CCA): general principles and definitions (undepreciated capital cost, recaptured capital
cost allowance, terminal loss, acquisitions and disposition of depreciable property, capital cost allowances classes) (B)
Special rules (change in use, non-arm's length, luxury passenger vehicle, deemed capital cost – inducement, disposition of building and land, available for use, short taxation year, loss on certain transfers, consideration – FMV rules) (C)
o (c) Cumulative Eligible Capital (CEC): general rules, calculation of CEC, acquisition and disposition of eligible capital
Use the ITA to determine an corporation's net income and deductions from various sources Use the ITA to determine tax implications of associated corporations
Presented: Topic 1: Business Income Theory
Distinguish between active and passive sources of income
Topic 2: Calculation of Net Business Income for a Corporation
Apply provisions from Section 12, 18, 19, 20, and 67 of the Income Tax Act to compute net business income for a corporation
Topic 3: Tax Planning
Recognize tax planning opportunities related to business income for a corporation
Assessed: Assignment 6.1: Calculation of Net Business Income
Apply provisions from Section 12, 18, 19, 20, and 67 of the Income Tax Act to compute net business income for a corporation
Assignment 6.2: Reasonable Expectation of Profit
Distinguish between active and passive sources of income
Discussion 6.1: Passive or Active?
Distinguish between active and passive sources of income
Quiz 6: Quiz 6.1
Distinguish between active and passive sources of income Apply provisions from Section 12, 18, 19, 20, and 67 of the Income Tax Act to compute net
business income for a corporation Recognize tax planning opportunities related to business income for a corporation
Supplemental Assignment 6.1: Net Business Income Calculations
Apply provisions from Section 12, 18, 19, 20, and 67 of the Income Tax Act to compute net business income for a corporation
Reading: Byrd & Chen's Canadian Tax Principles, 2016-2017 Edition
Chapter 6, "Income or Loss from a Business"
Assessment Notes: Assignment 6.1: Computation of net business income for a corporation Assignment 6.2: Discussion of reasonable expectation of profit (REOP) draft legislation and review court cases Supplemental Assignment 6.1: Alternate computation of net business income for a corporation Discussion 6.1: Distinguish between passive (property) and active (business) income, discuss scenarios Readings: Byrd & Chen's Canadian Tax Principles, 2014-2015 Edition Chapter 6, "Income or Loss from a Business", entire chapter
6.1.2 Determines income taxes payable for a corporation in routine situations o (a) Sources and types of income:
Business or Property Income: types of income (active business income, property income, interest income, dividend income, rental properties, capital gain/loss), basic rules and principles, inclusions, deductions – limitations) (B)
Use the ITA to determine an corporation's net income and deductions from various sources
Presented: Topic 1: Property Income
Distinguish between property income and business income Apply the provisions of Section 9 to 37 and Section 67 of the ITA to compute net property
income for a corporation Apply the provisions of Sections 9 to 37 to calculate foreign investment income earned by a
corporation resident in Canada Identify tax planning opportunities related to property income
Topic 2: Capital Gains and Losses
Identify the criteria to distinguish between capital gains and business income Apply sections 38 to 55 of the ITA to compute taxable capital gains and allowable capital
losses Apply the provisions of subsection 13(21.1) for dispositions of real property Describe the replacement property provisions of subsection 13(4) and 44(1) Identify tax planning issues related to taxable capital gains and allowable capital losses
Assessed: Assignment 7.1: Calculating Net Investment Income for a Corporation
Apply the provisions of Section 9 to 37 and Section 67 of the ITA to compute net property income for a corporation
Apply the provisions of Sections 9 to 37 to calculate foreign investment income earned by a corporation resident in Canada
Identify the criteria to distinguish between capital gains and business income Apply sections 38 to 55 of the ITA to compute taxable capital gains and allowable capital
losses
Discussion 7.1: Net Investment Income
Apply the provisions of Section 9 to 37 and Section 67 of the ITA to compute net property income for a corporation
Apply the provisions of Sections 9 to 37 to calculate foreign investment income earned by a corporation resident in Canada
Identify the criteria to distinguish between capital gains and business income Apply sections 38 to 55 of the ITA to compute taxable capital gains and allowable capital
Distinguish between property income and business income Apply the provisions of Section 9 to 37 and Section 67 of the ITA to compute net property
income for a corporation Apply the provisions of Sections 9 to 37 to calculate foreign investment income earned by a
corporation resident in Canada Identify tax planning opportunities related to property income Identify the criteria to distinguish between capital gains and business income Apply sections 38 to 55 of the ITA to compute taxable capital gains and allowable capital
losses Apply the provisions of subsection 13(21.1) for dispositions of real property Describe the replacement property provisions of subsection 13(4) and 44(1) Identify tax planning issues related to taxable capital gains and allowable capital losses
Supplemental Assignment 7.1: A Corporation's Net Investment Income
Apply the provisions of Section 9 to 37 and Section 67 of the ITA to compute net property income for a corporation
Apply the provisions of Sections 9 to 37 to calculate foreign investment income earned by a corporation resident in Canada
Identify the criteria to distinguish between capital gains and business income Apply sections 38 to 55 of the ITA to compute taxable capital gains and allowable capital
losses
Reading: Byrd & Chen's Canadian Tax Principles, 2016-2017 Edition
Chapter 7, "Income from Property" Chapter 8, "Capital Gains and Capital Losses"
Course-Level Assessment Milestone 7.1: Computation of Net Income for a Corporation
Compute net income for a corporation taxpayer resident in Canada, determined per Section 3 of the ITA
Compute Capital Cost Allowance (CCA) deductions Use the ITA to determine an corporation's net income and deductions from various sources
Assessment Notes: Assignment 7.1: Calculate net investment income for a corporation Supplemental Assignment 7.1: Calculate net investment income for a corporation
Discussion 7.1: Discuss calculations of net investment income for a corporation Readings: Chapter 7 (excluding the sections: "Individuals – Modified Accrual Method", "Income Trusts")) Chapter 8, except sections:
Provisions for Special Assets – Principal Residence Personal Use Property Listed Personal Property Gains and Losses on Foreign Currency
Notes: Updates: None CPA competencies:
6.2.1 Assesses a corporate tax entity's general tax issues o Sources and Computation of Taxable Income
(a) Sources and types of income: Business or property income basic rules and principles, inclusions, deductions - limitations (B)
6.2.2 Determines income taxes payable for a corporation in routine situations o Sources and Computation of Taxable Income
(b) Capital cost allowance (CCA) Exchanges of property – replacement (C) Disposition of a building and land (C)
(d) Taxable capital gains and allowable capital losses: General rules, definitions and computation (B) Identical property rule (B) Proceeds of disposition - allocation (B) Inadequate consideration, gifting (B) Business investment loss (B) Capital gains reserves (B) Small business share rollover (B) Special rules (B) Dispositions to affiliated persons (C) Options and convertible property (B) Adjusted cost base - inclusions and deductions (B)
Compute taxable income and Federal taxes payable for a corporation
Presented: Topic 1: Calculation of Taxable Income for a Corporation
Apply Sections 110.1, 111, and 112 of the ITA to compute taxable income for a corporation Describe how taxable income is allocated, for purposes of calculating provincial income taxes
for a corporation with business operations across provinces
Topic 2: Calculation of Part 1 Taxes Payable for a Corporation
Apply Section 123, 124, and 125 to compute Federal tax payable Describe the conditions required for a Canadian Controlled Private Corporation (CCPC) to be
eligible for the Small Business Deduction, the Manufacturing and Processing Profits Deduction and the General Rate Reduction
Define Specified Investment Income Define different types of corporations for tax purposes Apply Section 126 of the ITA to compute the Foreign Tax Credit
Topic 3: Tax Planning
Recognize tax planning opportunities related to deductions in the computation of taxable income
Recognize tax planning opportunities related to the computation of Part I tax payable
Assessed: Assignment 8.1: Calculating Taxable Income and Taxes Payable
Apply Sections 110.1, 111, and 112 of the ITA to compute taxable income for a corporation Describe how taxable income is allocated, for purposes of calculating provincial income taxes
for a corporation with business operations across provinces Apply Section 123, 124, and 125 to compute Federal tax payable Describe the conditions required for a Canadian Controlled Private Corporation (CCPC) to be
eligible for the Small Business Deduction, the Manufacturing and Processing Profits Deduction and the General Rate Reduction
Define Specified Investment Income Define different types of corporations for tax purposes Apply Section 126 of the ITA to compute the Foreign Tax Credit Recognize tax planning opportunities related to deductions in the computation of taxable
income Recognize tax planning opportunities related to the computation of Part I tax payable
Describe the conditions required for a Canadian Controlled Private Corporation (CCPC) to be eligible for the Small Business Deduction, the Manufacturing and Processing Profits Deduction and the General Rate Reduction
Quiz 8: Quiz 8.1
Apply Sections 110.1, 111, and 112 of the ITA to compute taxable income for a corporation Describe how taxable income is allocated, for purposes of calculating provincial income taxes
for a corporation with business operations across provinces Apply Section 123, 124, and 125 to compute Federal tax payable Describe the conditions required for a Canadian Controlled Private Corporation (CCPC) to be
eligible for the Small Business Deduction, the Manufacturing and Processing Profits Deduction and the General Rate Reduction
Define Specified Investment Income Define different types of corporations for tax purposes Apply Section 126 of the ITA to compute the Foreign Tax Credit Recognize tax planning opportunities related to deductions in the computation of taxable
income Recognize tax planning opportunities related to the computation of Part I tax payable
Supplemental Assignment 8.1: Taxable Income and Taxes Payable
Apply Sections 110.1, 111, and 112 of the ITA to compute taxable income for a corporation Describe how taxable income is allocated, for purposes of calculating provincial income taxes
for a corporation with business operations across provinces Apply Section 123, 124, and 125 to compute Federal tax payable Describe the conditions required for a Canadian Controlled Private Corporation (CCPC) to be
eligible for the Small Business Deduction, the Manufacturing and Processing Profits Deduction and the General Rate Reduction
Define Specified Investment Income Define different types of corporations for tax purposes Apply Section 126 of the ITA to compute the Foreign Tax Credit Recognize tax planning opportunities related to deductions in the computation of taxable
income Recognize tax planning opportunities related to the computation of Part I tax payable
Reading: Byrd & Chen's Canadian Tax Principles, 2016-2017 Edition
Chapter 11, "Taxable Income and Tax Payable for Individuals Revisited" Chapter 12, "Taxable Income and Tax Payable for Corporations"
Assignment 8.1: Comprehensive question calculating taxable income and taxes payable for a corporation Supplemental Assignment 8.1: Comprehensive question calculating taxable income and taxes payable for a corporation Discussion 8.1: Distinguish the requirements, and the related tax implications, for a CCPC to claim the General Rate Reduction, the Small Business Deduction and the Manufacturing and Processing Profits Deduction. Readings: Byrd & Chen's Canadian Tax Principles, 2014-2015 Edition
Chapter 12 (entire chapter) Chapter 11 only section called "Foreign Tax Credits Revisited"
Notes: Updates: No regular updates CPA Competencies:
6.1.1 Assesses a corporate entity's general tax issues o Stakeholder Relationships
(d) Personal service business (B) 6.1.2 Determines taxes payable for a corporation in routine situations
o Computation of Taxes Payable (a) Tax Payable for a corporation: including small business deduction, general
tax reduction (B) (c) Computation of taxable income deductions (e.g. donations, loss carry-overs,
dividends, etc.) (B) Rules applicable to all taxpayers (foreign tax credit) (B)
Lesson 9: Associated Corporations and Related Party Transactions
Outcomes:
Use the ITA to determine tax implications of associated corporations Use the ITA to determine tax implications of affiliated and/or related taxpayers
Presented: Topic 1: Related and Affiliated Persons
Apply Section 251 of the ITA to determine if taxpayers are related Apply Section 251.1 of the ITA to determine if taxpayers are affiliated Describe the tax consequences on transfers of property between affiliated persons Apply section 69 of the ITA to compute the tax consequences on non-arm’s length transfers of
property
Topic 2: Associated Corporations
Apply Section 256 of the ITA to determine if two corporations are associated Describe the tax consequences if two corporations are associated
Topic 3: Tax Planning
Describe tax planning opportunities related to associated corporations
Assessed: Assignment 9.1: Determine a Relationship
Apply Section 251 of the ITA to determine if taxpayers are related Apply Section 251.1 of the ITA to determine if taxpayers are affiliated Describe the tax consequences on transfers of property between affiliated persons Apply section 69 of the ITA to compute the tax consequences on non-arm’s length transfers of
property Apply Section 256 of the ITA to determine if two corporations are associated Describe the tax consequences if two corporations are associated Describe tax planning opportunities related to associated corporations
Discussion 9.1: Corporations: Related, Affiliated or Associated
Apply Section 256 of the ITA to determine if two corporations are associated Describe the tax consequences if two corporations are associated
Apply Section 251 of the ITA to determine if taxpayers are related Apply Section 251.1 of the ITA to determine if taxpayers are affiliated Describe the tax consequences on transfers of property between affiliated persons Apply section 69 of the ITA to compute the tax consequences on non-arm’s length transfers of
property Apply Section 256 of the ITA to determine if two corporations are associated Describe the tax consequences if two corporations are associated Describe tax planning opportunities related to associated corporations
Apply Section 251 of the ITA to determine if taxpayers are related Apply Section 251.1 of the ITA to determine if taxpayers are affiliated Describe the tax consequences on transfers of property between affiliated persons Apply section 69 of the ITA to compute the tax consequences on non-arm’s length transfers of
property Apply Section 256 of the ITA to determine if two corporations are associated Describe the tax consequences if two corporations are associated Describe tax planning opportunities related to associated corporations
Reading: Byrd & Chen's Canadian Tax Principles, 2016-2017 Edition
Chapter 14, "Other Issues in Corporate Taxation" Chapter 16, "Rollovers under Section 85"
Assessment Notes: Assignment 9.1: Determine if two corporations are related, affiliated and/or associated and describe the tax consequences. Two or more comprehensive cases. Supplemental Assignment 9.1: Determine if two corporations are related, affiliated and/or associated and describe the tax consequences. Two or more comprehensive cases. Discussion 9.1: Discussion Questions Reading: Byrd & Chen's Canadian Tax Principles, 2014-2015 Edition
Chapter 14, Section "Associated Companies" 14-35 to 14-14-50 Chapter 16. Sections "Affiliated Persons" 16-54 to 16-61
Use the ITA to determine refundable taxes for a corporation
Presented: Topic 1: Taxation of Investment Income Theory
Describe the General Rate Income Pool (GRIP) and Low Rate Income Pool (LRIP) for a corporation
Describe how integration affects the taxation of investment income for corporations in Canada
Topic 2: Calculation of Taxes Payable on Investment Income for a CCPC
Apply subsection 123.3 of the Income Tax Act to calculate additional refundable tax on investment income (ART)
Apply subsection 129(3) of the Income Tax Act to calculate the refundable dividend tax on hand (RDTOH) balance
Apply subsection 129(1) of the Income Tax Act to calculate the dividend refund
Topic 3: Tax Planning
Recognize the tax planning opportunities related to refundable taxes
Assessed: Assignment 10.1: Calculating Taxes Payable on Investment Income
Describe the General Rate Income Pool (GRIP) and Low Rate Income Pool (LRIP) for a corporation
Describe how integration affects the taxation of investment income for corporations in Canada Apply subsection 123.3 of the Income Tax Act to calculate additional refundable tax on
investment income (ART) Apply subsection 129(3) of the Income Tax Act to calculate the refundable dividend tax on
hand (RDTOH) balance Apply subsection 129(1) of the Income Tax Act to calculate the dividend refund Recognize the tax planning opportunities related to refundable taxes
Discussion 10.1: Integration
Describe how integration affects the taxation of investment income for corporations in Canada
Describe the General Rate Income Pool (GRIP) and Low Rate Income Pool (LRIP) for a corporation
Describe how integration affects the taxation of investment income for corporations in Canada Apply subsection 123.3 of the Income Tax Act to calculate additional refundable tax on
investment income (ART) Apply subsection 129(3) of the Income Tax Act to calculate the refundable dividend tax on
hand (RDTOH) balance Apply subsection 129(1) of the Income Tax Act to calculate the dividend refund Recognize the tax planning opportunities related to refundable taxes
Supplemental Assignment 10.1: Investment Income - Calculating Taxes Payable
Describe the General Rate Income Pool (GRIP) and Low Rate Income Pool (LRIP) for a corporation
Describe how integration affects the taxation of investment income for corporations in Canada Apply subsection 123.3 of the Income Tax Act to calculate additional refundable tax on
investment income (ART) Apply subsection 129(3) of the Income Tax Act to calculate the refundable dividend tax on
hand (RDTOH) balance Apply subsection 129(1) of the Income Tax Act to calculate the dividend refund Recognize the tax planning opportunities related to refundable taxes
Reading: Byrd & Chen's Canadian Tax Principles, 2016-2017 Edition
Chapter 13, "Taxation of Corporate Investment Income"
Course-Level Assessment Milestone 10.1: Computation of Taxable Income & Taxes Payable for a Corporation
Compute taxable income and Federal taxes payable for a corporation Use the ITA to determine tax implications of associated corporations Use the ITA to determine tax implications of affiliated and/or related taxpayers Use the ITA to determine refundable taxes for a corporation
Assessment Notes: Assignment 10.1: A comprehensive calculation of Taxes Payable on Investment Income for a corporation Supplemental Assignment 10.1: A comprehensive calculation of Taxes Payable on Investment Income for a corporation (Alternate) Discussion 10.1:
Notes: Updates: Occasional updates required for tax rates CPA Competencies:
6.1.1 Assesses a corporate entity's general tax issues o General Concepts and Principles of Taxation
(j) Integration under ITA (C) 6.1.2 Determines income taxes payable for a corporation in routine situations 6.1.3 Determines income taxes payable for a corporation in non-routine situations
o Computation of Taxes Payable (a) Tax payable for a corporation (B)
Including RDTOH, refundable Part I tax and Part IV tax
Lesson 11: Tax Planning for Corporations and Other Corporate Tax Issues
Outcomes:
Apply the principles of income taxation to tax planning decisions for corporations
Presented: Topic 1: Benefits of Incorporation
Describe the benefits of incorporation Identify the legal structures for a business Describe tax planning opportunities related to the Active Business Income of a Canadian-
controlled private corporation (CCPC)
Topic 2: Owner-Manager Remuneration
Describe the tax consequences of various types of remuneration for an owner-manager of a Canadian-controlled private corporation (CCPC)
Topic 3: Shareholder Benefits
Apply section 15 of the ITA compute shareholder benefits Describe the tax implications of section 15 on shareholder transactions
Topic 4: Capital Dividend Account
Apply section 83 of the ITA to compute the balance in the Capital Dividend Account Describe the tax implications of the Capital Dividend Account
Assessed: Assignment 11.1: Tax Planning for Corporations
Describe the benefits of incorporation Identify the legal structures for a business Describe tax planning opportunities related to the Active Business Income of a Canadian-
controlled private corporation (CCPC) Describe the tax consequences of various types of remuneration for an owner-manager of a
Canadian-controlled private corporation (CCPC) Apply section 15 of the ITA compute shareholder benefits Describe the tax implications of section 15 on shareholder transactions Apply section 83 of the ITA to compute the balance in the Capital Dividend Account Describe the tax implications of the Capital Dividend Account
Describe the benefits of incorporation Identify the legal structures for a business Describe tax planning opportunities related to the Active Business Income of a Canadian-
controlled private corporation (CCPC) Describe the tax consequences of various types of remuneration for an owner-manager of a
Canadian-controlled private corporation (CCPC)
Quiz 11: Quiz 11.1
Describe the benefits of incorporation Identify the legal structures for a business Describe tax planning opportunities related to the Active Business Income of a Canadian-
controlled private corporation (CCPC) Describe the tax consequences of various types of remuneration for an owner-manager of a
Canadian-controlled private corporation (CCPC) Apply section 15 of the ITA compute shareholder benefits Describe the tax implications of section 15 on shareholder transactions Apply section 83 of the ITA to compute the balance in the Capital Dividend Account Describe the tax implications of the Capital Dividend Account
Supplemental Assignment 11.1: Tax Planning Issues for Corporations
Describe the benefits of incorporation Identify the legal structures for a business Describe tax planning opportunities related to the Active Business Income of a Canadian-
controlled private corporation (CCPC) Describe the tax consequences of various types of remuneration for an owner-manager of a
Canadian-controlled private corporation (CCPC) Apply section 15 of the ITA compute shareholder benefits Describe the tax implications of section 15 on shareholder transactions Apply section 83 of the ITA to compute the balance in the Capital Dividend Account Describe the tax implications of the Capital Dividend Account
Reading: Byrd & Chen's Canadian Tax Principles, 2016-2017 Edition
Chapter 9, "Other Income, Other Deductions, and Other Issues" Chapter 14, "Other Issues in Corporate Taxation" Chapter 15, "Corporate Taxation and Management Decisions"
Assessment Notes: Assignment 11.1: Theory questions related to tax planning issues for a corporation
Supplemental Assignment 11.1: Alternative questions related to tax planning issues for a corporation Discussion 11.1: Provide tax advice to client on benefits of incorporation including owner-manager remuneration Readings:
Chapter 14: Section "Capital Dividend Account" 14-90 to 14-134 Chapter 15: Sections, "The Decision to Incorporate" 15-1 to 15-57, "Shareholder Benefits
Including Loans" 15-100 to 15-122, "Management Compensation" 15-123 to 15-179 Chapter 9: Sections 9-141 to 9-155 (Section 69) and 9-167 to 9-171
Notes: Updates: None CPA competencies:
6.1.1 Assesses a corporate tax entity's general tax issues o Legal Forms and Structures
Explain the mechanics of corporate reorganizations
Presented: Topic 1: Corporate Reorganization Theory
Describe tax basis shareholder’s equity Compute Paid Up Capital (PUC) Describe the different types of corporate dividends
Topic 2: Corporate Reorganizations
Describe the implications of a corporate reorganization under section 85 of the Income Tax Act Describe the implications of a corporate reorganization under section 86 of the Income Tax Act Apply the provisions of section 84 of the Income Tax Act to compute deemed dividends
Topic 3: Sale of a Business
Describe the tax implications on the sale of a Canadian-controlled private corporation (CCPC) achieved by the sale of corporate assets or the sale of the corporation’s shares
Topic 4: Tax Planning
Recognize the tax planning opportunities related to corporate reorganizations Describe tax planning opportunities related to the sale of a business
Describe the implications of a corporate reorganization under section 85 of the Income Tax Act Describe the implications of a corporate reorganization under section 86 of the Income Tax Act Apply the provisions of section 84 of the Income Tax Act to compute deemed dividends
Discussion 12.1: Anti-Avoidance Rules
Describe the implications of a corporate reorganization under section 85 of the Income Tax Act Apply the provisions of section 84 of the Income Tax Act to compute deemed dividends
Describe tax basis shareholder’s equity Compute Paid Up Capital (PUC) Describe the different types of corporate dividends Describe the implications of a corporate reorganization under section 85 of the Income Tax Act Describe the implications of a corporate reorganization under section 86 of the Income Tax Act Apply the provisions of section 84 of the Income Tax Act to compute deemed dividends Describe the tax implications on the sale of a Canadian-controlled private corporation (CCPC)
achieved by the sale of corporate assets or the sale of the corporation’s shares Recognize the tax planning opportunities related to corporate reorganizations Describe tax planning opportunities related to the sale of a business
Supplemental Assignment 12.1: Reorganizing a Corporation
Describe the implications of a corporate reorganization under section 85 of the Income Tax Act Describe the implications of a corporate reorganization under section 86 of the Income Tax Act Apply the provisions of section 84 of the Income Tax Act to compute deemed dividends
Reading: Byrd & Chen's Canadian Tax Principles, 2016-2017 Edition
Chapter 11, "Taxable Income and Tax Payable for Individuals Revisited" Chapter 14, "Other Issues in Corporate Taxation" Chapter 16, "Rollovers under Section 85" Chapter 17, "Other Rollovers and Sale of an Incorporated Business"
Course-Level Assessment Milestone 12.1: Tax Planning Advice and Corporate Reorganizations
Apply the principles of income taxation to tax planning decisions for corporations Explain the mechanics of corporate reorganizations
Assessment Notes: Assignment 12.1: Determine the appropriate corporate reorganization to use in various client situations Supplemental Assignment 12.1: Determine the appropriate corporate reorganization to use in various client situations - Alternate Discussion 12.1: Discussion question on anti-avoidance rules related to corporate reorganizations, specifically S.84.1 and S.85(2.1) provisions Reading: Byrd & Chen's Canadian Tax Principles, 2016-2017 Edition
Chapter 14: Sections, "Tax Basis Shareholders' Equity" 14-74 to 14-14-89, "Distributions of Corporate Surplus" 14-94 to 14-134
Chapter 16: Excluding section called "ITA 55(2)" Chapter 17: section, "Exchange of Shares in a Reorganization – ITA 86" 17-15 to 17-47 and
"Sale of an Incorporated Business" 17-116 to 17-115 Chapter 11: Sections "Lifetime Capital Gains Deduction" 11-68 to 11-81
Notes: Updates: None CPA Competencies:
6.1.4 Advises on tax consequences of specific tax-planning opportunities for shareholders and their closely held corporations
6.1.5 Analyzes the tax consequences or planning opportunities for complex corporate transactions
6.1.6 Describes the tax consequences of other corporate and partnership restructuring transactions
o Tax Planning for Corporations and Individuals (b) Business structure planning
Business combinations and corporate reorganizations (NA) Transfer of assets to a corporation (NA) Non-arm's length sale of shares (C) Purchase and sale of assets versus shares (NA)
NOTE: The 1st two concepts under (b) are not required knowledge upon entry into CPA PEP
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