Question

ACCT411, Income taxation

Question 1

Identify the provision of the Income Tax Act that deals with each of the following items. Be as specific as possible in citing the reference to the Act.

Item	Part	Division	Subdivision	Section	Subsection	Paragraph	Provision
Definition of ‘Person”	XVII	-	-	248	(1)	-	Subsection 248(1)
Limitation on deduction of RRSP administration fees
Deductibility of personal and living expense
Director’s fee income
Definition of automobile
Insert on money borrowed for passenger vehicle
Deductibility of work space in home for business

Answer 1

Below have explained and mentioned all definitions and corresponding sections.

Item	Part	Division	Subdivision	Section	Subsection	Paragraph	Provision
Definition of ‘Person”	XVII	-	-	248	-1	-	Subsection
							248(1)
Limitation on deduction of RRSP administration fees						This fee typically ranges from 1-2% of your account size. These fees may be charged on tax-deferred accounts such as TFSAs, RRSPs and RRIFs. The same rules apply — fees on tax-deferred accounts are not tax-deductible	208
Deductibility of personal and living expense						If the resident is in the assisted living facility for custodial and not medical care, the costs are deductible only to a limited extent. ... Residents who are not chronically ill may still deduct the portion of their expenses that are attributable to medical care, including entrance or initiation fees	535
Director’s fee income						Directors' remuneration is the process by which directors of a company are compensated, either through fees, salary, or the use of the company's property, with approval from the shareholders and board of directors.	15
Definition of automobile						Definition of automobile: Motorized vehicle consisting of four wheels and powered by an internal engine. Automobiles are used to transport people and items	248(1)
Insert on money borrowed for passenger vehicle						You can deduct interest you paid on money you borrowed to buy a motor vehicle or passenger vehicle that you use to earn employment income.	16
Deductibility of work space in home for business						Individuals who work from home may be eligible to take a tax deduction for a portion of their housing expenses. A home office is a part of the home that is used exclusively on a regular basis for business. ... The home office deduction is calculated based on the percentage of the work area to the total area of the home.	24