ACCOUNTING DEPARTMENT

Transcription

1 ACCOUNTING DEPARTMENT Course: BAC 332B - TAXATION II / WINTER 2014 Professor: Anthony Vallée avallee@ubishops.ca COURSE OBJECTIVES: This course builds upon the principles and concepts of Canadian income tax introduced in Taxation I, BAC 331. In particular, it examines the application of income tax law as it applies to Corporations. Attention is given to effective income tax planning for shareholder-management remuneration, tax-effective uses of corporations, and capitalgain tax deferrals. GRADING SCHEME: T2 corporate return 20 % Midterm (2) 40 % Final examination 40 % 100 % NOTE: Tests and examinations will cover all work completed to date. Assignments are due at the start of the class indicated. Late assignments will not be accepted; all assignments should be typed. You need at least 50% in total in the final examination to pass the course. No supplemental (assignments, tests or examination). The only electronic devices allowed will be standard calculators. Use of a reasonably annotated copy of the Income Tax Act is permitted for the exams. TEXT: Byrd, Chen, Canadian Tax Principles Edition, Pearson; package of two volumes & CD-ROM Ernst & Young s Annotated Income Tax Act 2013 (11th edition) CRA website: Lecture notes

2 CONTENTS CLASS 1: JANUARY INTRODUCTION AND REFRESHER 1.1 Review of the structure of the ITA applicable to corporations 1.2 Residency of Corporations 1.3 Procedures and administration 1.4 Review of the classification of income 1.5 Classification of corporations References: - Chapters 1, 2, 5, 6, 7, 8 - Chapter 20 (par. 35 to 39) - ITA: 89(1), 125(7), 150, 150.1, 152, 156.1, 157, 163.2, 165, 220, 230, 245, 248(1) balance-due day, 250(4) - Canadian Marconi v. R., [1986] 2 S.C.R. 522 (S.C.C.) available at: CLASS 2: JANUARY 21 & CLASS 3: JANUARY TAXABLE INCOME AND TAX PAYABLE FOR CORPORATIONS 2.1 Computation of net income 2.2 Computation of taxable income 2.3 Basic computation of taxes of all corporations 2.4 Corporate rate reductions 2.5 Small business deduction 2.6 Related persons and associated corporations References: - Chapter 12 - Chapter 14 (par ) - ITA: 110.1, 111, 112, 123, 123.4, 124, 125, 125.1, 181.2, 251, ITR: 400, 401, 402 CLASS 4 : FEBRUARY 4 & CLASS 5B: FEBRUARY 11 CLASS 5A: MID-TERM #1 3. INTEGRATION, TAXATION OF INVESTMENT INCOME, REFUNDABLE TAXES, OVERVIEW OF GRIP AND LRIP 3.1 Integration 3.2 Refundable Part I tax on income from investments 3.3 Refundable Part IV tax on dividends received 2

3 3.4 Refundable dividend tax on hand (RTDOH) 3.5 Dividend refund 3.6 Designation of eligible dividends: GRIP and LRIP References: - Chapter 13 - Chapter 7 (par ) - ITA: 82, 89, 121, 129, 185.1, 186 CLASS 6: FEBRUARY OTHER ISSUES IN CORPORATE TAXATION 4.1 Acquisition of control 4.2 Investment tax credits References: - Chapter 14 (except par and par ) - ITA: 37, 111, 127, ITR: 2900, 2902, 4600 CLASS 7 : FEBRUARY 25 Introduction to Profile T2 (LAB SESSION) T2 Corporate return CLASS 8: MARCH 11 & CLASS 9B: MARCH 18 CLASS 9A: MID-TERM #2 5. CORPORATE DISTRIBUTIONS 5.1 Shareholder s equity: GAAP, corporate law and tax basis 5.2 Dividends (taxable and non taxable) 5.3 Deemed dividends 5.4 Shareholder benefits and loans References: - Chapter 14 par Chapter 15 par ITA: 15, 80.4, 82, 83, 84, 184, ITR: 2101,

4 CLASS 10A: MARCH CORPORATE TAXATION AND MANAGEMENT DECISIONS 6.1 Advantages and disadvantages of incorporation 6.2 Remuneration : salary versus dividend 6.3 Other planning aspects of using Corporations : capital gain deduction, introduction to estate freeze & brief overview of the attribution rules References: - Chapter 15 par Chapter 15 par ITA: 67 and various sections already covered CLASS 10B : MARCH 25, CLASS 11 : APRIL 1 ST & CLASS 12A: APRIL 8 7. ROLLOVERS UNDER SECTION 85, SPECIFIC ANTI-AVOIDANCE RULES AND OTHER ROLLOVER PROVISIONS 7.1 Transfer of property to a corporation by a shareholder 7.2 Restriction on elected transfer price 7.3 Application of basic rules 7.4 Application of detailed rules 7.5 Shareholder s position 7.6 Corporation s position 7.7 Affiliated persons and losses on transfers 7.8 Gift to related person 7.9 Section 84.1 ITA: Dividends stripping 7.10 Section 55(2) ITA: Capital gains stripping 7.11 Other rollovers (s. 51, 85.1, 86) References: - Chapters 16, 17 - ITA: 51, 55, 84.1, 85, 85.1, 86 CLASS 12B : APRIL 8 8. SALE OF AN INCORPORATED BUSINESS, INTRODUCTION TO TRUSTS AND PARTNERSHIPS 8.1 Winding-up of a Canadian corporation and comparison: sale of assets vs shares 8.2 Introduction to Partnerships 8.3 Introduction to Trusts References: - Chapters 17, 18, 19 - ITA: 88(2), 96 to 105 4

5 TAXATION II DATES TO REMEMBER WINTER 2014 Dates February 11 Mid-Term #1 March 18 Mid-Term #2 March 25 T2 return 5