Federal Tax Deductions for Self-Employed Business Owners
KNOWLEDGE EXPECTED OF: CFP® Professionals
Highest Knowledge Level: Understanding
Knowledge Levels and Associated Verbs
|
Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
|
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
|
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
|
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
|
||||||
|---|---|---|---|---|---|---|---|---|---|
|
Define
To state exactly the meaning of
|
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
|
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
|
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
|
Compare
To note the similarities and differences between two or more things
|
Estimate
To determine an approximate value for
|
Calculate
To find the value using mathematics
|
Convert
To change from one form or purpose to another
|
Evaluate
To reach a conclusion or make a through careful study
|
Interpret
To give the meaning of / to construe or understand / to translate orally
|
Hold cursor over or click on each term to read its definition.
Additional Knowledge Expected of CFP Professionals
- Explain the factors the Canada Revenue Agency may consider when determining the deductibility of an expense incurred in the pursuit of a business profit, such as:
- Reasonability of expense
- Incurred to earn business income
- Identify expenses for which a self-employed individual may claim a deduction.1
- Explain eligibility requirements for a deduction that may be claimed by a self-employed individual.
Capital Cost Allowance (CCA)
- Identify opportunities when capital cost allowance may be claimed.
- Define terms associated with capital cost allowance,2 such as:
- Capital cost
- Depreciable property
- Fair market value (FMV)
- Proceeds of distribution
- Undepreciated capital cost (UCC)
- Identify classes of depreciable property.3
- Explain capital cost allowance.
- For the first year of ownership of an asset4
- For each year subsequent to the first year of ownership of the asset5
- Define a terminal loss.
- Define a recapture of capital cost allowance.
- Explain potential risks to an individual associated with claiming capital cost allowance deductions for a personal residence.
- Explain the income tax treatment resulting from the disposition of depreciable capital property.
