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UNIVERSITY OF ALBERTA FACULTY OF BUSINESS
DEPARTMENT OF ACCOUNTING AND MIS Accounting 468
Corporate Income Tax Winter 2010
Instructor: Loretta Amerongen Lecture B1
Office: Bus. 4-21G Phone No.: 492 – 2225 Email:
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Office Hours: Tuesday and Thursday from 1:00 - 2:30
In addition to these times, you may ask questions at any other time that I am in my office provided that I am not otherwise occupied. I will not be available at the following times due to teaching commitments:
Monday and Wednesday: 9:00 - 11:00 & 12:00 - 3:30 Tuesday and Thursday: 9:00 - 1:00
Required Materials:
Textbook: Beam, R; Laiken, S; Barnett, D. Introduction to Federal Income Tax in Canada, 30th Ed. Toronto, ON: CCHC 2009. You must use this version of the text.
Various tax rules from previous versions of the text are either outdated or no longer in effect.
Course Package: The course package contains notes to be used in class as a basis for lectures. The course package will be sold by the Accounting Club.
Prerequisite: Accounting 467
It is assumed that students taking this course have an in depth understanding of the following:
• Calculation of net income for tax purposes for a business including the calculation of capital cost allowance and cumulative eligible capital.
• Calculation of property income for a corporation and the ability to distinguish property income from active business income.
• Calculation of capital gains and losses and deductibility of losses.
Course Objectives: This is the second of two courses in federal income tax law designed to achieve the following objectives:
(1) Explain the theoretical concepts behind the specific provisions of the law.
(2) Apply the law in practical and case settings.
(3) Introduce tax planning concepts through practical problem application.
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The best way to learn and understand tax law is to apply the rules to problems. The textbook provides five types of questions: example problems (embedded in each chapter), multiple choice questions, exercises and assignment problems. Solutions are provided for: example problems, review questions, multiple choice question and
exercises. No solutions are available for assignment problems as publication is prohibited by the authors of the text. Additional problems (similar to assignment problems in text) and solutions are provided on the student DVD that comes with the book. 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 provided. The solutions should then be reviewed with the objective of identifying the key issues required to be addressed. When these concepts and principles are thoroughly understood, the rules in the legislation fit into place logically. The ability to identify the issue and quickly understand the approach to use to deal with the issue will save valuable time in exams.
Class Notes: If you miss a class, it is your responsibility to obtain the notes from another student. I do not lend my notes to students as, at times, notes given in class may differ from my written notes.
Additional Practice Problems: I will provide a sample practice case for the first midterm, and for the final exam, a selection of old exam questions for which the solutions have been updated to reflect current year rules.
Exams: Prior to each exam I will hand out an information sheet about the exam. You may ask any questions you wish about the exam in class, however I reserve the right to decide whether I will answer a particular question. I will not answer questions about exam content, etc. asked outside of the classroom. I will, however, answer any questions about understanding of course notes and problems and solutions.
Grades in the course will be assigned on the following basis:
Midterm I 40 %
Final exam 60 %
Midterm exam Wednesday, March 3
Final exam Monday, April 26st at 9:00
All exams are closed book. You will, however, be permitted to take one 8.5 by 11 inch sheet of paper into the exam on which you may include formula's etc. You should note that your formula sheet should not be used as a substitute for studying the material and practicing problems.
The midterm is 80 minutes and the final exam is 3 hours or 180 minutes. Any student who continues to write after time is called for the exam will be assessed a penalty sufficient to remove any advantage gained by continuing to write.
3 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. I will not email class handouts to students, so if you miss class you will have to either come to my office to get the handout or have another student pick it up for you.
Please be on time for class and remain for the entire period. Arriving late or leaving early is very 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.
Bathroom Breaks: 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 or 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.
Lap Tops: No laptop usage is permitted during class. The sole exception is if you bring a documented medical excuse 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.
Absences and Missed Work
If you are absent from a midterm exam for an acceptable reason (illness or family
emergency) you are required to send an email to me informing me that you were unable to attend the midterm and explaining the nature of your difficulty. I may, at my
discretion, require proof supporting your stated reason for missing the midterm, either in the form of a statutory declaration or other supporting documentation. I follow the policy of sending all requests for deferral to the undergraduate office. In the event that the midterm examination is missed for an acceptable reason, no make-up will be given.
Instead, the credit assigned to the mid-term will be reallocated to the final.
If you miss the final exam, you must apply to the undergraduate office for an exam deferral.
Once you have written an exam, I will not re-allocate marks because of explanations given after the fact.
Note that job interviews, whether in Edmonton or outside of Edmonton, are not considered a valid reason for missing an exam. Also, please remember that it is your
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responsibility to ensure that any travel arrangement at Christmas or at other times in the year do not conflict with your exam schedule.
Grades in the Course
The University average grade distribution is based on all courses across campus including courses of varying levels of difficulty. A curve is used to determine the final grade distribution for this course with natural break points used to distinguish between various grades. As a result, the distribution of grades in this course will not necessarily coincide exactly with the University average distribution. Traditionally the median grade in this course has ranged from a B to a B+.
Corporate Tax Readings
Reading Section Numbers
Net Income and taxable income for a Corporation 11,010 – 11,160 Basic Calculation of Tax for all Corporations 11,210 – 11,370
Small Business Deduction 12,110 – 12,160
Manufacturing and Processing Profits Deduction 11,910 – 11,930; 12,230
Investment Tax Credits 11,345 – 11,355; 12,240 – 12,265
Integration for Business Income 12,010 – 12,045
Tax Basis Shareholders’ Equity 15,010 – 15,065
Distributions of Corporate Surplus 15,100 – 15,180
Investment Income 12,310 – 12,400
Rules of Association 12,170 – 12,210
Non-arm’s Length Transfer of Property 8,215 – 8,220
Income Attribution 8,230 – 8,245; 6,070 – 6,115
Death of a Taxpayer 8,310
Shareholder Manager Decision Making 13,010 – 13,250; 12,270 – 12,285; 12,405 Section 85 Rollovers (Omit GST on Rollovers) 16,010 – 16,190
QSBCS Capital Gains Deduction 13,340 – 13,385
Winding Up of a Canadian Corporation 15,210 – 15,240
Sale of an Incorporated Business 15,310 – 15,320