Intro Tax Ch 4 notes

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ACCT 3335
Oct 16, 2023
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Intro Tax Ch 4 notes 33. Scholarships are not taxable if 1. The student enrolls full time to a qualifying uni and 2. At the uni the programs requires atleast 12 hours of course work There is a $500 exemption for students with scholarships who don't meet thr requirements whoever must report the rest. Ex $1400 scholorship means $900 must be reported in "other income" 34. Students receive tax credit based on amount of tuition they paid in the yr. If the student pays for post sec courses not at a post secondary school level they still get credits if - At least 16 yr old - Is enrolled in the education institution to obtain skills for, or improve their skills in, an occupation Tax credit is = to tuition paid times an "appropriate %", so for example 15%. So a student could claim $1,200 tax credit ($8000 x 15%) Limits of it: - Must use the tuition tax credit to reduce their tax pable to $Nil - Excess amount is carried forward (no limit in years) - Portion can be transferred to spouse or pearent etc How the transfer works: - Max of $750 - Example if I use $150 to get to $Nil I can transfer $600 to someone 35. if a foreign students meets Canadian residency requirements they are eligible for all relevant tax credits (like tuition credits)
36. Tax credits are typically "use it or lose it" and don't carry forward to other years Relevant tax credits for a full time student working part time include - Tuition credit - Credit for interest on student loan - Credit for EI and CPP contribution - Personal Tax credit - Employment Tax credit 37. Registered Education Saving Plan (RESP) The subscriber sets up the RESP (usually the parent) and the beneficiary is the child who will use the RESP The promoter is who hold the money, manages, and give it (like a bank RBC) The beneficiary must be a resident of Canada to claim it. The subscriber cannot deduct the contribution to an RESP from their income on their income tax return How to contribute depends on the promoter, but there is a limit of $50000 during their lifetime Best way to withdraw is to have beneficiary pursue post secondary. Its paid out as educational assistance payments (EAP). The subscriber contribution is not taxable to the beneficiary or sub If the beneficiary does not use RESP, the Sub can give it to another beneficiary or get refund tax free
38. RRSP is tax-free until it is withdrawn from the account
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