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Investment (Form (T5013 Partnership Income (looks quite complicated, Pay…

- - - - the proceeds
      - the cost or book value
      - capital gain or loss
      - the face value sold of bonds
  - - - Dividends (both eligible and ineligible)
      - Capital gains
      - Interest income
      - Other income
      - Foreign business income
      - Foreign non-business income
- - - - Eligible dividends
        
        reported at 138% of the amount paid
        
        Dividend Tax Credit
        
        is equal to 15.02% of the grossed-up taxable amounts (for 2017)
      - Non-eligible dividends
        
        referred to as small business dividends
        
        Dividend Tax Credit
        
        is equal to 10.5127% of the grossed-up taxable amounts (for 2017)
        
        reported at 117% (for 2017) of the amount paid
      - Note: Provincial dividend tax credits for both eligible and non-eligible dividends
    - - reported as regular income
      - not grossed-up
      - not eligible for the Dividend Tax Credit
  - - - Schedule 3
      - T3
    - - taxed at the inclusion rate – currently 50%
        
        taxable capital gain
        
        allowable capital loss
      - average cost for purchased shares in batches or lots
      - Attribution Rules
        
        who should report investment income and whose hands it is taxable in
        
        Rule
        
        Applies to property (including cash) by means of gift, sale, loan or any matter to a spouse or to a person who is under 18 years of age and the taxpayer does not deal at arm’s length
        
        Do not apply where fair market value consideration is paid for the property in question
        
        lending of money between spouses
        
        not allowed: if no interest charged
        
        allowed: interest charged at CRA’s prescribed rate or at a commercial rate and the interest is paid within 30 days of the year end
        
        Minor children
        
        Attribution will apply to investment income earned by a minor child but not to any capital gains
        
        money invested in child's name will not result in attribution of the income if the money originally belonged to the child (birthday gifts, child tax credit, etc)
    - - can only be deducted to reduce capital gains
      - can be carried back 3 years
        
        use form T1A
        
        will receive a Notice of Reassessment
      - can be carried forward indefinitely
      - in the year of death, can be applied against all other sources of income
    - - Sell price: Proceeds of disposition (POD)
      - Buy price: Adjusted Cost Base (ACB)
    - - pays tax on the distributions
        
        interest
        
        dividend
        
        etc
      - distributions must be taken into account to calculate ACB (when selling) to avoid double taxation