knowledge topics
Federal Tax Deductions for Self-Employed Business Owners
KNOWLEDGE EXPECTED OF: CFP® Professionals Only
- 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.
- Estimate the income tax impact of claiming a deduction by a self-employed individual.
Capital Cost Allowance (CCA)
- Identify opportunities when capital cost allowance may be claimed.
- Define terms associated with capital cost allowance2, such as:
- Capital cost
- Depreciable property
- Fair market value (FMV)
- Proceeds of distribution
- Undepreciated capital cost (UCC)
- Compare current and capital costs using the criteria as established by the Canada Revenue Agency.3
- Identify classes of depreciable property.4
- Estimate undepreciated cost of capital.
- Estimate capital cost allowance.
- For the first year of ownership of an asset.5
- For each year subsequent to the first year of ownership of the asset.5
- Define a terminal loss.
- Explain a terminal loss.6
- Estimate a terminal loss.
- Define a recapture of depreciation.
- Explain a recapture of depreciation.7
- Estimate a recapture of depreciation.
- Explain potential risks to an individual associated with claiming capital cost allowance deductions for a personal residence.
- Estimate the income tax impact resulting from the disposition of depreciable capital property.
Glossary of Verbs (mouse over to see definition)
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Define
To state exactly the meaning of
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Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
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Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
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Compare
To note the similarities and differences between two or more things
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Estimate
To determine an approximate value for
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Calculate
To find the value using mathematics
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Convert
To change from one form or purpose to another
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Evaluate
To reach a conclusion or make a judgement through careful study
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Interpret
To give the meaning of / to construe or understand / to translate orally

REFERENCES
- http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/bsnssxpnss/menu-eng.html
- http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/229/cca-dpa/menu-eng.html
- http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/bsnssxpnss/crrnt-eng.html
- http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/rprtng/cptl/dprcbl-eng.html
- http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/229/cca-dpa/clclt/menu-eng.html
- https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-3-property-investments-savings-plans/series-3-property-investments-savings-plans-folio-4-capital-cost-allowance/income-tax-folio-s3-f4-c1-general-discussion-capital-cost-allowance.html#p1_98
- https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-3-property-investments-savings-plans/series-3-property-investments-savings-plans-folio-4-capital-cost-allowance/income-tax-folio-s3-f4-c1-general-discussion-capital-cost-allowance.html#N11259