Question

Question 5 (theory questions)

1) Explain what it means when partnership is through entity

2) Why it is important to know whether or not a Canadian company is associated?

3) What are the similarities and differences for the charitable donations credit and political donations credit?

4) A business is able to claim the legal benefit of its assets, does a partnership arrangement do the same?

Answer 1

1) through entity is legal business entity that passes income on to the owners and/or investors. Flow-through entities are a common device used to limit taxation by avoiding double taxation. Only the investors/owners are taxed on revenues, not the entity itself.

2)In Canada, a person's authority is related to his or her position and responsibility. Women occupy the same range of positions as men and have the same kinds of authority. People do not have authority just because of their name, status, social class or sex.

3)Charitable Donation Tax Credits

CDTCs are issued partly by the federal government and partly by your provincial or territorial government. The credits are claimed on the basis of official charitable donation tax receipts and are non-refundable.

These receipts can only be issued by “qualified donees”, which are the following types of organizations:

Registered Canadian charities

Registered Canadian amateur athletic associations (RCAAAs)

Registered national arts services organizations (RNASOs)

The United Nations and its agencies

Certain listed housing corporations

Certain listed foreign universities

Certain listed foreign charitable organizations

The federal, provincial and territorial governments, and

Canadian municipalities and certain public bodies.

Political Contribution Tax Credits

Political contribution tax credits are issued totally separately by the federal government and provincial/territorial governments, and the two levels have their own rules about what can be claimed.

You can get federal tax credits for contributing to federal registered political parties, federal registered electoral district associations, and candidates for federal office.

At the provincial/territorial level, the rules vary as to whom you can get credits for contributing to. Generally, this includes political parties registered in that province/territory, candidates seeking election to the provincial/territorial legislature, and sometimes provincial/territorial constituency association

4)Business activities are often entered into by one or more participants. The reasons for individuals joining forces in business are numerous and include such factors as increased borrowing power, contributions of different business skills, and a larger initial asset base. The partnership is one common vehicle through which individuals can pursue business opportunities together. Since partnerships are regulated by legislation in all 10 provinces it is important to understand how this legislation will impact on how partnerships are formed, and the rights and obligations attaching to participation in a partnership. Partners are personally liable for the business obligations of the partnership. This means that if the partnership can't afford to pay creditors or the business fails, the partners are individually responsible to pay for the debts and creditors can go after personal assets such as bank accounts, cars, and even homes.