Video Notes Flashcards: Independent Contractor_vs_Employee, Tax Credits, TFSA, RRSP, and Incorporation (Grant Thornton)

A set of Q&A flashcards covering topics from independent contractor vs employee, expense claims, tax credits (tuition, home buyer, MB credits), TFSA/RRSP, and incorporation as presented in the lecture notes.

What is the main topic discussed on Page 1 of the notes?

Independent Contractor vs Employee and related topics like claiming expenses and receipts.

Name several expense categories listed under 'Claiming Expenses' on Page 1.

Advertising and Promotion; Insurance; Dues and Memberships; Supplies; Rent; Salaries, Benefits; Telephone, Utilities; Lab Fees; Computer; Meals and Entertainment; Interest; Office; Legal and Accounting; Repairs and Maintenance; Travel; Auto; Continuing Education.

What word is repeatedly emphasized to document expenses on Page 1?

Receipts (Receipts, Receipts!!!).

List the Insurance subtopics mentioned on Page 2.

Malpractice; Health and Dental; Life; AD&D; Disability; Tax Exempt - Investment; Taxation.

What is the basic difference between a tax deduction and a tax credit as described on Page 3?

A deduction lowers your taxable income; a credit reduces the amount of tax you owe.

Name two examples of tax credits listed on Page 3.

Personal amounts; CPP contributions/Employment insurance premiums; Tuition Credits; New Home Buyers Tax Credit.

From which document do tuition credits accumulate, according to Page 3?

T2202A from school.

What happened to the $465 per full-time month tuition credit in 2017?

It was gone/not available for 2017.

What happens to most tuition credits, as noted on Page 4?

They are carried forward and generally used up in the first two years of full-time practice.

What is the New Home Buyers Credit amount and its year-specific tax saving mentioned on Page 5?

$5,000, translating to about $750 in tax savings in the year you claim it.

What determines the Manitoba Rent Credit and what should you provide to your accountant?

The amount of rent paid; provide address, rent paid, and anyone you shared the dwelling with.

What percentage of fees does the Manitoba Tuition Rebate cover?

60% of your fees.

What are two key limits of the Manitoba Tuition Rebate?

Only against MB taxes; lasts 10 years; max out after total fees exceed $42,000.

How long does the Manitoba Tuition Rebate last and what is the typical yearly saving?

10 years; about $2,500 per year.

When did the TFSA program start and who is eligible?

Started in 2009; 18 years or older and a resident of Canada.

Are TFSA contributions deductible and are withdrawals taxable?

Contributions are not deductible; withdrawals are not taxable.

What is the maximum cumulative TFSA contribution limit to date?

$46,500.

What were the TFSA annual contribution limits for 2015 and 2016?

2015: $10,000; 2016: $5,500.

What determines the 2016 RRSP maximum, and what was it?

Based on prior year earned income; 2016 maximum was $25,370 (based on $140,944 of earned income for 2015).

Until what age can you contribute to an RRSP, according to the notes?

Cumulative to age 71.

What three topics are covered under Incorporation on Page 10?

Advantages; Disadvantages; Taxation.

What is the assumed personal income in the basic incorporation example (Pages 11–12)?

$300,000.

In the no-corporation scenario for a $300,000 income, what are the tax due and total cash figures shown?

Tax due $124,000; Total cash $176,000 (highest marginal tax rate shown as 50.4%).

What is the general takeaway from the incorporation example regarding taxes and cash flow?

Incorporation can defer taxes and increase after-tax cash available for investment, with potential income splitting opportunities.

What is one key intent of corporate class investments and how do they relate to retirement planning?

They enable tax deferral and can act like an RRSP when money is withdrawn in the future.

What is a potential income-splitting strategy mentioned in the notes?

Having family members own shares of the corporation.

What tagline is associated with Grant Thornton in these notes?

An instinct for growth.

Who is identified as the firm behind these notes?

Grant Thornton LLP, a Canadian Member of Grant Thornton International Ltd.