Question

Question a)

Louis is worried about how much tax he will have to pay this year and he is looking for anything that he might have missed that will decrease his Taxable Income. All of the following could decrease his Taxable Income, with the exception of:

	a credit for a charitable donation.
	a deduction for contributions to an RPP.
	application of a non capital loss carryforward.
	application of a net capital loss carryforward.

Question b)

With respect to charitable donations claimed by an individual:

	there are no income limits on the amount claimed for donations of Crown gifts.
	the donations made in a particular year must be claimed in that year if there is sufficient taxes payable.
	unused charitable donations may be carried back 3 year and carried forward 5 years.
	the limit on eligible amounts claimed in any given year is always limited to 75% of net income for tax purposes.

Question c)

Net capital losses may be applied against any type of income in the year of death or the immediately preceding year.

	True
	False

Answer 1

Hi...

• Louis can consider following to reduce its taxable income:

1. Any amount received from a Tax Free Savings Account (TFSA)
2. Any gift and inheritance received.
3. Amount received from Life Insurance Policy, following someone’s death.

• With respect to charitable donations claimed by an individual:

1. There are two scenario for claiming the donation of crown gifts
   1. If the gift was donated during the lifetime, then the limit of claiming in respect to gift to a value not greater than 75% of the individual’s net taxable income for the year. However, if the gift exceeds this limit then the excess claim can be carry forward for five years.
   2. If the gift was donated in final year of life or gift donated by the will, then the limit is exceed from 75% to 100% of donor’s net income. However, if the amount of gift exceeds the donor’s net income for the year then the gift will be treated as previous year gift and the limit will also be increased for that year.
2. The donation is deductible in the same year in which it has been made. However, the donation should be made before the closing of the financial year. For example: the donation is consider to be made when the individual mails the check or the amount charged in credit card, not when you pay the credit card company.
3. Unused charitable donation can be carry forward for five years maximum.
4. The limit to claim donation in any given year is 75% respective the donation is made during lifetime. However, if it is done at the time of final year then it is increased to 100% of the net income.

• The statement is true – the net capital loss may be applied against any type income in the year of death or the immediately preceding year. However, first the amount needs to be calculated that can be used. Further subtract any capital gains that the deceased had claimed to date. The remaining amount can be used to deduct any other income in the year of death or the immediately preceding year.