CH 11

Chapter 11
Other Income And Other

Deductions
Organization
 Individual Inclusions – Subdivision d
 Individual Deductions – Subdivision e
 Paired Inclusions/Deduction
 Registered Savings Plans
© 2007, Clarence Byrd Inc. 2

Individual Inclusions
 Pension Benefits – ITA
56(1)(a)(i)
 Retiring Allowances – ITA
56(1)(a)(ii)
 100 Percent Into Income
 Deduct $2,000 (prior to 1996)
Plus $1,500 (prior to 1989) Per
Year For Transfers To RRSP

 Death Benefits – ITA
56(1)(a)(iii)
 Amounts Greater Than
$10,000
 Spouse or other
individual (does not have
to be related)

Income Inclusions From
Deferred Income Plans
 Payments From RRSPs
ITA 56(1)(h)
 Payments From DPSPs
ITA 56(1)(i)
 RRIF Withdrawals
ITA 56(1)(h) and (t)

 Home Buyers’ Plan
ITA 56(1)(h.1)

 Lifelong Learning
Plan
ITA 56(1)(h.2)

Education Assistance
 Training Allowances
 Scholarships
 Before 2006: Includes amounts greater
than $500 + $2,500
 2006 and subsequent: Tax Free
 Research Grants, Reduced By
Research Costs

Social Assistance
 Social Assistance -
ITA 56(1)(u)
 Included In Net
Income
 Deducted From
Taxable Income

Workman’s Compensation
 Workers’
Compensation -
ITA 56(1)(v)
 Included In Net
Income
 Deducted From
Taxable Income

 Universal Child Care Benefit –
ITA 56(6)
 $100 per month for each child
under age 6
 Does not affect the income test
benefits (i.e., the GST credit)
 Does not affect deductible child
care costs

Individual Deductions:
CPP Contributions – Self Employed
 Self employed must pay both halves

of CPP ($1,990)(2) = $3,980 for 2007
 Tax credit for one-half
 Deduction under ITA 60(e) for second
half

Moving Expenses
 Who Can Deduct - ITA 62

 Move to new work location
 From old work location
 From full time attendance at
university
 From unemployment
 To Full Time Attendance At
University

Moving Expenses
 What can you deduct?

 Travel cost – taxpayer and
family
 Moving household effects
 Meals/lodging at new or old
residence (15 days)
 Lease cancellation costs

Moving Expenses
 What can you deduct?

 Selling costs – old residence
 Costs of acquiring new
residence
 $5,000 interest, taxes, and
utilities – old residence
 Cost of revising legal
documents
Moving Expenses
 Tax Planning
 Important if costs shared
 Employer pays for non-
deductible
 Cost Of Visits To New
Location
 Loss On Old House
 1st $15,000
 1/2 of excess

Child Care Cost – ITA 63
 Eligible Child
 Under 16 At Some
Time During Year
 Older, But Mentally Or
Physically Infirm
(DBTC Not Required)
 Costs Must Be
Supported By Receipts
 Generally Deducted
By Low Income
Spouse
Child Care Cost Limits
 Least Of:
 Amount Paid (Limited To $100/$175/$250
Per Child, Per Week When At Camp Or
Boarding School)
 $4,000/$7,000/$10,000 Per Child
 2/3 Earned Income (Employment,
Business, Scholarships, Research Grants,
Other For Full Time Students)

Exception
 Higher Income Spouse If

Lower Income Spouse Is:
 In Prison
 Full Or Part Time Attendance At
Designated Educational
Institution
 Sick (> 2 Weeks) Or Disabled
 Separated (> 90 Days)
 Limits Same Except “Actual”
Is Limited To $100/$175/$250
Per Week (Not Just Camp)
Disability Supports – ITA 643
 Eligibility: To help
disabled individual:
 Work as employee
 Carry on a
business
 Attend a
designated
educational
institution

ITA 64 - Disability Supports Deduction
 Limited to the lesser of

 Sum of employment income, business
income, scholarships and research
grants
 Qualifying cost, less amounts reimbursed
 An alternative to using the costs for
medical expense credit
 Will be used if in higher tax bracket.
Related Inclusions And Deductions
 Employment
Insurance
 Receipts included
under ITA
56(1)(a)(iv)
 Repayments
deducted under ITA
60(c)

 Pension Income
Splitting
 Can re-allocate up
to 50 percent
 Include under ITA
56(1)(a.2)
 Deduct under ITA
60(c)
 Can create pension
tax credit

Spousal And Child Support
 Spousal Vs. Child Support

Related Inclusions And Deductions:
Spousal Support
 Taxable To Recipient/Deductible To
Payor If:
 To Spouse Or Former Spouse
 Living Apart
 Paid Pursuant To A Formal Agreement
 Made On A Periodic Basis

Child Support
 Was Treated Like Alimony

 Agreements After April, 1997
 Not Deductible To Payor
 Not Taxable To Recipient
 Existing Agreements Not Changed Unless:
 Joint Election For Payments After April, 1997
 Agreement Is Changed After April, 1997
 Agreement Not To Include Or Deduct

Annuity Recipts
 ITA 56(1)(d) Requires The Inclusion Of

All Annuity Payments “Not Otherwise
Required To Be Included”
 If acquired with RRSP funds – no
deduction
 If acquired with after-tax funds – capital
element deduction under ITA 60(a)

Annuity Receipts
Example: Purchase, with after-tax funds, a ten year

annuity of $16,055 per year. Cost = $100,000.
ITA 56(1)(d): Include $16,055

ITA 60(a): Deduct [($16,055)($100,000 ÷ $160,550)] =
$10,000

Registered Education Savings
Plans (RESPs)
 This Chapter
 Registered Education Savings
Plans (RESPs)
 Registered Disability Savings
Plans (RDSPs)
 Chapter 13
 Registered Pension Plans (RPPs)
 Registered Retirement Savings
Plan (RRSP)
 Registered Retirement Income
Funds (RRIFs)

Plans (RESPs)
 Maximum Contributions (Non-Deductible)
 No annual limit
 $50,000 total for each beneficiary
 Penalty for excess contributions

Plans (RESPs)
 Tax Free Earnings
 Plan Must Be
Terminated After 25
Years

Plans (RESPs)
 Canada Education Savings Grants
 Income > $74,357: 20%
 Income > $37,178, < $74,357: 30% on
first $500, plus 20%
 Income < $37,178: 40% on first $500,
plus 20%
 Annual maximum 20% Of $2,500
 Overall maximum = $7,200
 Limits If Age 16 Or 17
 Must have $2,000 in the year or $100
per year for four years prior to year the
individual turns 16.
Plans (RESPs)
 Canada Learning Bonds
 Children Born After 2003
 Each Year That Family Is
Eligible For the National
Child Benefit Supplement
 Year 1 - $500 + $25
 Subsequent Years - $100
 Until Child Turns 15

Plans (RESPs)
 Contributions Back To Contributor

 Paid Back Tax Free
 Earnings To Beneficiary
 To Receive Payments, Full Time
Attendance At Post-Secondary
Educational Institution In Canada

Plans (RESPs)
 Earnings To Contributor
 1997 - Contributor Can Withdraw:
 Beneficiaries > 21
 Plan Running For 10 Years
 Rollover To RRSP (If Room)
 No Rollover - 20% Extra Tax

Registered Disability Savings
Plans (RDSPs)
 Objective
 Providing funds for the long-term
care of disabled children

Plans (RDSPs)
 Contributions (Non-Deductible)
 $200,000 for each beneficiary
 No annual limit
 Earnings accumulate tax free

Plans (RDSPs)
 Canada Disability Savings Grants
 Family income up to $74,357
 300% of first $500, plus 200% of next $1,000
 Family income over $74,357

 100% of first $1,000

Plans (RDSPs)
 Canada Disability Savings Bonds
 Contributions of up to $1,000 per year.
 Phase out
 Starts when family income reaches $20,883
 Gone when family income reaches $37,178

Plans (RDSPs)
 Distributions
 Contributions and earnings to beneficiary
or legal representative
 Payments must begin when beneficiary
reaches age 60
 Payments subject to an annual maximum


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Chapter 11

Other Income And Other

© 2007, Clarence Byrd Inc. 2

© 2007, Clarence Byrd Inc. 3

© 2007, Clarence Byrd Inc. 4

© 2007, Clarence Byrd Inc. 5

© 2007, Clarence Byrd Inc. 6

© 2007, Clarence Byrd Inc. 7

© 2007, Clarence Byrd Inc. 8

© 2007, Clarence Byrd Inc. 9

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 Self employed must pay both halves

© 2007, Clarence Byrd Inc. 12

 Who Can Deduct - ITA 62

© 2007, Clarence Byrd Inc. 13

 What can you deduct?

© 2007, Clarence Byrd Inc. 14

 What can you deduct?

© 2007, Clarence Byrd Inc. 16

© 2007, Clarence Byrd Inc. 18

 Higher Income Spouse If

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 Limited to the lesser of

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 Spousal Vs. Child Support

© 2007, Clarence Byrd Inc. 24

© 2007, Clarence Byrd Inc. 25

 Was Treated Like Alimony

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 ITA 56(1)(d) Requires The Inclusion Of

© 2007, Clarence Byrd Inc. 27

Example: Purchase, with after-tax funds, a ten year

ITA 56(1)(d): Include $16,055

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 Contributions Back To Contributor

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 Family income over $74,357

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