Capital cost
Capital cost generally means the total costs for the acquisition of the depreciable property expressed in Canadian dollars according to the rate of exchange in effect at the time of acquisition. It includes the price paid to acquire a property, along with costs associated with the acquisition, such as transportation costs, installation costs, and provincial sales tax. In the case of property manufactured by the taxpayer, the cost includes material, labour, and overhead. Furthermore, the costs of any improvements or additions to a depreciable property are added to the capital cost of that property, while the costs of any subsidies or inducement payments reduce the capital cost of the depreciable property. The capital cost of depreciable property is the amount on which CCA may be claimed. top
Capital gain
The ITA does not define a capital gain per se; rather, it specifies certain rules applicable to the computation of a capital gain. However, the ITA states that a capital gain results from the disposition of capital property except for eligible capital property (ECP), inventory, an insurance policy, Canadian cultural property, Canadian resource property, foreign resource property, or timber resource property if the property's selling price (POD) exceeds the adjusted cost base (ACB) plus the costs of disposition. It is important to note that it is not the nature of the asset itself that causes the profit on sale to be considered a capital gain; rather, it is the use of the asset that is the significant factor. top
Charitable donations/gifts
Charitable gifts include donations to a registered charitable organization, a registered Canadian amateur athletic association, a municipality, the United Nations, and a university outside Canada. For individuals, charitable donations allow the taxpayer to claim a non-refundable tax credit. Corporations may deduct the amount of the donation in computing income for tax purposes. Other charitable donations include gifts to Her Majesty, cultural gifts to institutions, and ecological gifts. top
Child care expenses
Child care expenses are amounts paid to a resident of Canada to look after a child of the taxpayer or the spouse, when they are incurred for the purpose of earning income from an office, employment, or self employment, to carry on research for which a grant is received, or when attending a designated educational institution. They include payments to neighbours, friends, and other persons, including relatives over the age of 17 for day care, nursery schools, day camps including sports camps, and boarding schools. Note that in the case of boarding schools there are specific rules that must be followed. top
Controlled foreign affiliate
A controlled foreign affiliate is a foreign affiliate of the taxpayer that was controlled (greater than 50 percent voting control) at that time, directly or indirectly, in any manner by the taxpayer, the taxpayer and not more than four other persons resident in Canada, not more than four persons resident in Canada other than the taxpayer, a person or persons with whom the taxpayer does not deal at arm's length, or the taxpayer and a person or persons with whom the taxpayer does not deal at arm's length. top
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