A corporation purchased a cashable one-year $15,000.00 GIC.
At year-end $5,000.00 remains uncashed and $50.00 in interest has been earned.
Are the following GIFI codes correct?
GIFI 1180 Short-term investments - $5,000.00 GIC
GIFI 8094 Interest from other Canadian sources - $50.00 interest earned (or GIFI 8090 - Investment Revenue)
Thanks kindly
I doubt that I would read ITA S12 like that in this case, but I am not looking at the documents themselves.
I would suggest re-checking ITA Section 12, particularly S12(11) definitions for âinvestment contractâ, and specifically para (i) of that definition.
Presumably the GIC issuer would be issuing the correct slips.
(i) an obligation in respect of which the taxpayer has (otherwise than because of subsection (4)) at periodic intervals of not more than one year, included, in computing the taxpayerâs income throughout the period in which the taxpayer held an interest in, or for civil law a right in, the obligation, the income accrued on it for those intervals,
I have read this - what are you suggesting?
Thanks kindly
New here, moved over from Taxprep.
I though the original question was which GIFI code to use? If so, I would think 1180 and 9080 is fine. I come from the camp of âless is moreâ and I try to stick to generic lines where I can. Iâve never had CRA complain that interest from Canadian sources shouldâve been on 8094 vs 8090. I only use lines that appear on a clientâs financial statement and I donât split lines out for the purposes of the GIFI.
Of course, depends on what you are engaged to doâŚ
Iâm suggesting that tax accountants should ideally strive to ensure correctness that income for tax purposes is included or not included pursuant to the Income Tax Act (in this case, particularly Section 12), rather than by some allocation that a bookkeeper may or may not have made for bookkeeping or accounting purposes.
There are often tax divergences for items involving ITA S12, and hence, likely I would allocate it differently that what is suggested in your post, as different S12 treatment would appear to be appropriate.
You can probably find references also in more straight-forward English in things like Guide T4015.
However, you appear to be only dealing with $50, not $50 million, so we are not moving mountains here.
I am curious as Iâm always open to learning. I came from Big4 land and into the SME space on my own which is an adjustment. What different treatment would you be suggesting?
I would assume the interest is either accrued interest or actual cash interest. Would it not be appropriate to code to investment revenue?
I wouldnât have expected the anniversary day rule to kick in since its a one year cashable GIC?
I did give several references above, not sure what further I could add?
I understood from the OP that the terms of the relevant contract was that there was no triggering option exercised obliging entitlement to the $50 in the relevant time period.
Have reclassified this from T2 to TaxtopicsâŚ
May I suggest that the original poster, instead of asking this kind of question on this forum, instead upgrade his accounting and tax knowledgeâŚ
Chiming in from TaxCycle here. Just to be clear, this forum welcomes topics on accounting and tax questions, even if they are basic to some of the more experienced preparers. This is meant to be a safe place where ALL preparers can ask questions and we hope that the more experienced will assist when they feel it is appropriate. If you donât want to answer a question because you feel it is too basic, leave it there for someone else to address.
I know you are in a thorny position, Elizabeth, and yes, it is helpful if the Taxcycle forums are âsafeâ places.
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Unfortunately, sometimes some questions on the forums (and I am speaking generally, and NOT specifically singling out this poster or this thread or this question) are in more a grey area of a situation of âprotection of the publicâ and âin the publicâs best interestsâ more than whether a particular question is âbasicâ, or ânot basicâ. If such questions occur, it becomes an ethically difficult one to diplomatically address, since it is not really ethical to ignore such a matter.
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Whereas it is harmless to be asking a âbasicâ question, or a âcomplexâ question in a classroom setting, the same is not necessarily true when it affects the client (âpublicâ). Questions on these forums are generally ones that are being inflicted on the public, rather than theoretical classroom ones.
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Professionally Designated members / preparers have very strict mandatory Codes that MUST be followed to accept/decline assignments/cases where they do not have sufficient requisite expertise, and are under a duty to inform a client, for example: âSorry, I am re-referring you, as I donât know how to prepare your tax return with your information, because I am only comfortable with my skills to prepare tax returns which involve only filling in the T-slips in the boxes provided by tax softwareâ
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Sometimes questions (again, I specifically note that I am speaking generally in the forums, and NOT singling any user or question out) indicate a more fundamental problem, suggesting that a preparer with more advanced tax law skills or more advanced accounting skills should be looking at that particular clientâs file, in the client/publicâs best interests. Such (thankfully few) questions are the ones that are problematic, since they are simultaneously both difficult to address and difficult to ignore.
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Perhaps this thread should be split, so not to âdirty upâ the original threadâŚ
Please note that I understand the position of Taxcycle, in that it wants the forum to be a friendly place, oozing with goodwill, as one of the sales tools of excellent software you produce.
However, that can only go so far.
One of the reasons for my âoffendingâ post is that I am trying to keep the forum a friendly place, and also a safe place for practitioners to get their questions answered.
The problem you are starting to experience on the forum is what also lead to the demise of the old Greenpoint software forum, which is, that people start posting all sorts of questions which, to even be a practitioner, they should have the answer to, or be ashamed to even ask. The asking of these questions are going to, and are now receiving responses by seasoned practitioners, who are tired of the constant barrage of that certain class of posters. And it is fine if they occasionally have a âdumbâ question, we all have off âduhâ moments.
NOTABENE it is in my best interest, as well as yours, that the Forum remains a nice place to âhang outâ. I am doing what I can to keep it so.
Please be assured Elizabeth, that I am on the site of Taxcycle. And because of that, I will tell you frankly when are doing something well, and will also tell you frankly when you can improveâŚ
Please note that however, there should be a strict rule against âad hominemâ comments. Any such comments, no matter how slight, should be forthwith censured. I hesitate to be moderating on where I am being criticized, otherwise I would have already done so. Instead, I have limited my action here to self-defense.
The forum would be a friendlier place if those who think the question canât be answered, wouldnât. If you donât think you have enough information or if the question is too basic, feel free to ignore it. Thanks, Elizabeth, for your comments.
@Elizabeth â thanks for stepping in and providing some guidance here.
We are trying to create a friendly and helpful community in this space. We have avoided moderating the discussions for the most part, and I would like to keep it that way.
I would ask everyone to be respectful and keep the discussions productive.
With respect, I would suggest that there is, in tax, almost NO definably âcorrectâ response to any slightly complex situation. There are shades of grey varying from not quite white to not quite blackâŚand the issue of materiality also emerges.
I am strongly of the opinion that - regardless of what my professional association(s) may think - that my function is to support my client in locating the best possible tax strategy and results that fall within the law. One may end up in an argument with CRA (weâve all done that!) over whether something falls within a given section of the ITA or notâŚbut that is also what forums are for. To wrestle over approach.
It is most clearly NOT my requirement to either help CRA, audit for CRA or do anything else to support that organization in its quest to wrest funds from clients.
Materiality is another issue as pointed out above: my approach might be quite different if it didnât involve $15 in tax vs, (say) $15,000.
As always - respectful discussion is good. That is one of the reasons I like both this and other tax forums (fori? fora?) where we can learn from othersâ experience and wisdom.