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Department of ABA
Accounting 467 Basic Income Tax
Fall 2021 Instructor: Zachariah Smith, CA, CPA
Email: [email protected]
Office Hours via Email/Zoom – office hours on a request basis via email. Questions will first be addressed through email before determining whether a zoom meeting is
required.
COVID – all information provided below assumes in person classes will continue
throughout the semester. If that status changes and we are forced to go back to on-line learning, a revised syllabus will be provided.
Class times
Lecture A1 – Mondays and Wednesdays from 12:30PM to 1:50PM (BUS 2-5) Lecture A2 – Mondays and Wednesdays from 2:00PM to 3:20 (BUS 1-10) Holidays and Reading Week:
Monday, September 1 – Labour Day (No classes) Monday, October 11 - Thanksgiving (No classes) November 8 -12 - Reading Week (No classes)
Materials
Lecture Notes – Notes for each topical area will posted on eClass prior to the start of the lectures on that topic. The notes form the basis for the class lectures.
Practice Problems and Solutions – These will also be posted on eClass by topical area. The practice problems and solutions are mostly from the textbook other than prior to the midterm and final exams where additional more complex questions and solutions will be posted.
Required Materials: C. Byrd, I. Chen. Canadian Tax Principles, 2021 - 2022 Edition, Prentice Hall Canada Inc., Scarborough, Ontario, 2021. You must use this edition of the text; tax rules in previous editions are outdated
2 Learning Objectives:
This course incorporates the Learning Goals of the BCom Program, in particular critical thinking, and written communication. This course is designed to develop an
understanding of the concepts and practices that underlie financial reporting for a subset of more complex events and transactions including long-term investments, multinational operations, deferred income taxes and accounting for not-for profit organizations. At the end of this course, you will have developed the following course specific knowledge:
• An understanding of the rules and principles governing accounting for not-for-profit organizations including the ability to prepare a complete set of financial statements for a not-for profit organization.
• An understanding of rules and principles governing accounting for foreign currency transactions including accounting for individual transactions entered into by a Canadian company in a foreign currency, accounting for hedges of those
transactions and translation of the financial statements of a foreign subsidiary of a Canadian parent company.
• An understanding of the rules and principles governing accounting for long term passive investments, investments subject to significant influence, and investments subject to control, including the ability to prepare a complete set of consolidated financial statements.
• An understanding of accounting for deferred income taxes in complex situations.
In addition, you should be able use the knowledge acquired in the course to reason from basic principles to determine how to account for transactions in unfamiliar situations. This course incorporates the Learning Goals of the BCom Program, in particular critical thinking, and written communication. This is the first of two courses in federal income tax law designed to achieve the following objectives:
(1) To explain the theoretical concepts behind the specific provisions of the law.
(2) To apply the law in practical and case settings.
(3) To introduce basic tax planning concepts through practical problem application.
In this course you will develop an understanding of the concepts and rules of the Income Tax Act pertaining to the determination of personal income tax payable. At the end of this course, you will have developed the following course specific skills or knowledge:
a. You should understand the basic rules and principles used to determine net income for an individual and for a corporation.
b. You should understand how to determine taxable income for an individual c. You should be able to determine income tax payable for an individual.
d. You should be able to reason to a supported conclusion for the following grey areas of the tax law:
• Employee versus independent contractor
• Capital gain versus business income.
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This course is designed to meet the needs of students planning to enter a professional accounting program subsequent to graduation. At the end of this course, you will have the knowledge required to prepare a complex personal tax return for an individual;
determine net income for a corporation and address tax planning opportunities at an introductory level. If you are planning to take this course as an easy option because you want to have some tax knowledge, you may want to reconsider.
Preparing for Class: You will learn more in each lecture if you read the relevant text material before coming to class. As a general rule, I cover approximately 10 pages of course pack notes per lecture. You can match those to text coverage to determine which text pages to read. For example, the entire chapter on employment income is required reading. If the next 10 pages of course notes address automobile taxable benefits and expenses you can do the text readings from the employment income
chapter on those issues to prepare for class. In the event you do not have sufficient time to do the text readings before class, you can still benefit by reading through the next 10 pages of course pack notes, prior to class, so you have a preliminary understanding of what is being covered in that class.
Approach to the Materials: The best way to learn and understand tax law is to apply the rules to problems. Three types of problems are provided in the text: exercises, self- study problems and assignment problems. Solutions to the exercises and self-study problems are included in a solutions manual that comes with the text book. Solutions to relevant assignment problems will be posted on the course web-site (the list of relevant assignment problems will be provided once publisher permission is received). In order to master the material, you should practice all available questions.
Practicing Problems: When practicing problems, you should prepare a complete answer before looking at the solution. You should then review the solution with the objective of identifying key concepts or principles underlying the tax treatment of various items. When the underlying concept or principle is thoroughly understood, the rules in the legislation fit logically in place. The ability to identify an issue and quickly understand the required approach will save valuable time in exams. If you do not practice all of the problems you will not do very well on the exams.
Classroom Etiquette
Attendance: It is your responsibility to attend class. If you miss class for any reason, you are still responsible for all materials covered, announcements made and handouts provided.
Be on time for class and remain for the entire period. Arriving late or leaving early is inconsiderate of other students. If you have a valid reason for coming late or leaving early such as a previous or subsequent class some distance from this class, please discuss that with me.
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You should not normally leave or re-enter the classroom during the class period. Doing this is disruptive to fellow students and to the instructor. If you are affected by illness or medication such that you realize it may be necessary for you to leave during the class period, please arrive early enough to sit close to the door so that you may leave and return with a minimum of disturbance.
Cell Phones and other electronic devices: All cell phones, pagers and other
electronic communication devices must be turned off for the duration of the class. Text messaging and emailing, after the start of class, is not permitted under any
circumstances and if you are caught text messaging or emailing you may be asked to leave the class.
Exception: You may use cell phones in the back row of the classroom as long as cell phone use is not obvious to me (i.e. I cannot see you are using your cell phone). By sitting in any other row in either lecture you agree not to use your cell phone or other electronic devices during the lecture.
Lap Tops: No laptop usage is permitted during class. The sole exception is if you have documented evidence indicating that you must use a laptop to take notes. In that case you will be asked to sit in the back row to use your lap top to ensure you do not disturb the students around you.
Class Notes: If you miss a class, it is your responsibility to obtain the notes from another student. I do not provide my notes to students other than by way of in-class lectures.
Grades in the course will be assigned on the following basis:
Midterm I 25 %
Midterm II 25 %
Final exam 50 %
If you miss midterm I for an acceptable reason, in addition to the final exam written by the other students, you will also be required to write a question on employment income which will be worth 20% of your final grade. Your final exam will be worth 55% of your final grade. If you miss midterm II for an acceptable reason, in addition to the final exam written by the other students, you will also be required to write a question on business income which will be worth 25% of your final mark. Your final exam will be worth 50% of your final grade.
If both midterms are missed for an acceptable reason, in addition to the final exam written by the other students, you will be required to write a question on employment income worth 20% of your final grade and a question on business income worth 25% of your final grade. You final exam will be worth 55% of your final grade.
Midterm Dates:
Midterm I – CCIS 1 -140 Wednesday, October 6th at 6:00PM Midterm II – CCIS 1 -140 Wednesday, November 3rd at 6:00PM
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Final Exam Saturday, December 18th at 2:00 PM
The midterms and final are consolidated (including the Monday/Wednesday day-time classes and the Tuesday, night class). Midterms will be written at 6:00 PM on scheduled days – not in class. The location of the midterms is CCIS 1-140.
Information for Exams
Prior to each exam an information sheet about the exam will distributed in class. You may ask any questions you wish about exam content in lectures, in front of the rest of the class, however I reserve the right to decide whether I will answer a particular
question. I will not answer questions about exam content, asked outside of the lectures.
I will, however, answer any questions about understanding of course notes and problems and solutions.
Absences from Exams
Occasionally life events occur that require a student to miss term work, term
examinations, or final examinations. Excused absences are not granted automatically and will be considered only for acceptable reasons such as incapacitating illness, severe domestic affliction, or religious convictions.
Unacceptable reasons include, but are not limited to, personal events. When a student is absent without an acceptable excuse, a final grade will be computed using a raw score of zero for the work missed. Any student who applies for or obtains an excused absence by making false statements will be liable under the Code of Student Behaviour.
If a student is absent from a midterm exam for a legitimate and adequately documented reason, the weight of the missed exam will be reallocated to the final exam. In addition to the final written by other students, the student will have an additional question from the Midterm missed. There will be no deferred mid-term exams in this course.
If a student is absent from the final exam, he or she must obtain permission from the Undergraduate office to write a deferred final exam. The deferred exam date for this course will be Saturday, January 14, 2022 at 9:00 AM.
Academic Integrity
Absolute and complete academic honesty is expected of you in this course. It is
important for you as a student to behave in an ethical manner. The University of Alberta is committed to the highest standards of academic integrity and honesty. Students are expected to be familiar with these standards regarding academic honesty and to uphold the policies of the University in this respect.
Students are particularly urged to familiarize themselves with the provisions of the Code of Student Behaviour (online at
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http://www.governance.ualberta.ca/StudentAppeals.aspx) and avoid any behaviour that could potentially result in suspicions of cheating, plagiarism, misrepresentation of facts and/or participation in an offence. Academic dishonesty is a serious offence and can result in suspension or expulsion from the University.
Policy about course outlines can be found in Section 23.4(2) of the University Calendar.
Success in the Course
In order to do well in the course you will have to commit a significant amount of time to learning the material. Students who have done well in the past have indicated that they did the following in preparing for exams:
• Reviewed all of the lecture notes
• Did all of the textbook readings (Do not summarize the text – there is no time and little benefit to doing so).
• Practiced all of the problems including exercises, self study and assignment problems.
This includes all textbook exercise, self study and assignment problems (provided) and additional problems from old exams posted in the course website.
• When reviewing his or her solution to practice problems, made notes of items missed and followed up to determine the correct treatment including identifying why his or her treatment is wrong and the solution treatment is correct.
Students who have spent significant amounts of time summarizing the textbook and have, as a result, run out of time for practicing problems, have not done well on exams.
Detailed Topical Coverage
Will be posted on the course website shortly after classes start in September.
Prior to doing the assigned readings, you should review the learning objectives at the beginning of each relevant chapter.