Income From Property, Income From Other Sources & Other Deductions

Income may be derived from other sources such as dividends, income, pension plans, rental properties, royalties, interest or other sources not considered business income.

 

These other types of income often  have allowable deductions for tax purposes, however, not all are able to be carried forward to future tax periods. These types of income are called "passive income". Royalties are excluded from this category since it falls into the category of business income which is classified as "active income".

 

Interest is accrued to reflect past payouts and also present reporting periods.

 

Generally, dividends paid out by a Canadian corporation are taxable. Some are non-taxable, if there is an election to issue the dividends tax free to the recipient, the recipient may be entitled to the dividend tax-free. Dividends may be eligible or non-eligible. For eligible dividends, the dividends are grossed up and then multiplied by a stated percent of the federal tax.

 

eg. Federal Tax

 

	DIVIDENDS
	Canadian Co.´s		Foreign Co.
	Eligible	Non-eligible
Grossed Up Amount	144% = 36/25	125% = 5/4	0%
Federal Tax Credit	17,9739	13,3333	0%
Tax Withheld at Source	-	-	100%

 

Basically, other types of income are those which are not from business, employment or property at source. 

 

Pension income is taxable. Legal expenses may be deducted if for the reason they were expended to prove their right to entitlement to a pension which was later paid out. Death benefits are taxable if they are received due to an employee dying while on the job, and are taxable only on that portion paid out in excess of 10,000--.

 

Scholarships and research grants may be any of employment, business or other income. For office or point of employment, they are employment income. If received in the course of carrying on business, then business income, and if neithe apply, other income.

 

They are taxable in the year received, and can not result in a taxable loss since expenses are allowed only to the point of the income taken in.

 

Child support is taxable; however, other limitations apply depending on the total income of the tax payer.

 

Allowable deductions include, moving expenses for the purpose of getting to work. Some restrictions apply on meals and transportation and whether income from grants were received or the employer provided reimbursement for moving expenses.

 

Other deductions include child care or pension plan contributions, with restrictions based on relevant tax laws. Pension plan contributions which lead to a non-useable tax credit may be carried forward. Such is the case if contributions were made in excess of the recommended amount.