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ADM 4344B - Taxation II

Fall 2018
Professor Rick Musselman, CPA, CA, OCT
E-Mail Musselman@telfer.uottawa.ca

Office Hours and Office Wednesday 2:00 PM – 3:00 PM** or by appointment -


Location DMS 7153
** Note that these drop-in office hours are only held when
class is in session (i.e. there are no drop-in office hours
during reading week, exam weeks etc.)

Class Hours and Class Wednesday 10 – 11:20 CRX C030


Location Friday 8:30 – 9:50 CRX C030
Prerequisite(s) ADM 3345 and 4th year Telfer course requirements
Program of study Mandatory course for accounting option and for
specialization in accounting.

Course Deliverable Due Date Weight on


Final Grade
Mid-term exam #1 Saturday October 13 @ 1 PM - DMS 1130 30%

Mid-term exam #2 Saturday November 17 @ 1 PM - MNT 202 30%

Final exam TBD 40%

Course Description
This is the second course in a two-semester sequence designed to provide a thorough knowledge
of the Canadian income tax system for students who are planning careers as professional
accountants. After ADM 3345 and ADM 4344, students should be competent with respect to the
competency levels described at the entry level in the “CPA Competency Map” and the “CPA
Competency Map Knowledge Supplement”.

While it is not possible to neatly divide the Income Tax Act into provisions relating to
individuals and provisions relating to corporations, the primary emphasis in this second course is
on corporate taxation. However, knowledge of many of the concepts and procedures covered in
the first course will be required in this course.
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Course Contribution to Program Learning Goals
LG6 Pursue Self-Development and Exhibit a Commitment for Life-long Learning

LG7 Provide Value to the Business Community in a chosen Area of Specialization

Course Learning Objectives


In this course, students will learn to calculate the taxes payable by corporations. In addition,
students will learn to determine the tax impact of various management decisions, including
incorporation, remuneration / earnings distribution and corporate reorganization. This involves
the identification and application of numerous concepts contained within Canadian Tax law (the
Income Tax Act).

Methods Used to Evaluate Student Performance


Your grade in this course will be determined on the basis of the following weights:

Mid-term exam #1 30%


Mid-term exam #2 (Comprehensive / cumulative) 30%
Final exam (Comprehensive / cumulative) 40%

If a mid-term exam or the final exam is missed for a reason that can be supported with a medical
doctor’s certificate, the student must provide appropriate medical documentation to the
undergraduate office. The undergraduate office will forward your request to the Appeals Committee.
If a student misses mid-term exam #1 for reasons approved by the Appeals Committee, the weight
from the missed mid-term exam will be allocated as follows: 10% to mid-term exam #2 and 20% to
the final exam. If a student misses mid-term exam #2 for reasons approved by the Appeals
Committee, the student must write a deferred mid-term exam. If arrangements cannot be made to
have the deferred mid-term exam written prior to the final exam period, the weight of the mid-term
exam will be automatically added to the weight of the final exam. If appropriate medical
documentation is not presented to (and accepted by) the Undergraduate office, missed mid-
term exams and/or missed final exams will be assigned a grade of zero.

Please note that this course is quite difficult and success often requires students to accurately
and quickly respond to questions under significant time constraints. All material covered in
class and/or in the list of readings and assignment problems can be examined in any manner,
either directly or indirectly, at the discretion of the Professor.

Please note that it is not possible to submit extra course work in order to improve your mark.
Please also note that it is not possible to have the weight of the course deliverables changed
from the weights specified above. Similar to workplace expectations, consistency and timely
learning is important to achieve a good grade in this course.

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Course Attendance
The regulation regarding course attendance at Telfer is “Attendance at courses of instruction,
laboratory periods and discussion groups is mandatory.” Attendance in this course will not be
used to determine student grades. However, the Professor will likely not assist students who
request help or information due to their absence from class session(s). Class in this course is
highly beneficial for most students. The benefit of coming to class is that it provides students
with time-saving explanations and/or introductions and/or connections that will help reduce the
time students need to thoroughly learn the complex material. In addition, any in-class
announcements regarding the potential areas of focus for mid-term and final exams may not be
available through any other method.

Textbooks and Resources


1. Required: 2017/2018 Edition of Byrd & Chen. Canadian Tax Principles, Volumes 1 and 2,
Study Guide and online materials (online materials are available to the original purchaser
via a Student Access kit that is included in one of the books at the time of purchase).
a. Volume 1, Volume 2 and the study guide are available for in-library consultation at
Morisett Library. You will also need access to the online materials because this is
the only place where the self-study problems are located. Access to the online
material is not available at Morisett library.
b. Currently: For students who purchased a previous version of the text book and
registered for access to the online resources, students can receive a complimentary
access code to access the current version of the online materials. If you qualify, you
may send an email (using the email address you used to register for the previous
version of the online resources) to jeremy.guimond@pearsoned.com. Please include
in your email that you are a Telfer student requiring access to the online resources
for Byrd & Chen’s Canadian Tax Principles, 2017/2018 edition. Please also indicate
the course code of the course that you are enrolled in.
c. You will still need access to the current version of the printed Study Guide because
this is where the solutions to the self-study problems are located.
d. I recommend downloading all resources available on the online materials section
and keeping these resources in a safe place / safe places in case you require access
to these resources after your online access has expired.
2. Recommended: "CFE Case Writing - A Guide to Essential Case Writing Skills for the
Common Final Examination, 2nd Edition" by Jason Fleming (ISBN 978-0-7798-6627-4).
Available for purchase from Carswell.com.
a. Also available for loans from Morisset Library and available for in-library
consultation at Morisset Library.
3. Canada Revenue Agency Website (http://www.cra-arc.gc.ca/)
4. Recommended: Canadian Income Tax Act – Available through CCH Online (library database
– use Internet Explorer Browser and go to: http://biblio.uottawa.ca/en/databases - the Act
can be viewed in sections online) or through the Justice Laws Website where it can be
viewed in sections online, or downloaded as a single 3300-page PDF
(http://laws.justice.gc.ca/eng/acts/I-3.3/index.html).
5. Recommended Reading: CPA Competency Map Study Notes 2018 by Kathy Wolfe (available
for purchase at https://dcscpa.com/CFE/CPA-Competency-Map-Study-Notes).
a. Available for in-library consultation at Morisett Library.
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6. Recommended Reading: "CFE Tax: A Guide to Understanding the Basics of Canadian Income
Taxation, 6th Edition" ISBN: 978-0-7798-8628-9.
a. Available for purchase from Carswell.com and available for in-library consultation
at Morisset Library.

Other Information
The workload in this course is very heavy. You should plan to spend a minimum of ten to
twelve hours per week working on the relevant material.

Within each chapter, there are “Exercises” (EP) that focus on specific tax topics and calculations.
Additionally, there are a group of “self study problems” (SSP) that correspond to each Chapter.
The SSP are contained on the Byrd and Chen Companion website (this is a password protected
site that requires the use of an access code that is sold to the original purchaser of the text book –
see “Textbooks and Resources section above). The solutions to all of these problems can be
found in the printed Study Guide that accompanies your text. To enjoy a reasonable degree of
success in this course, you should attempt all of the EPs and SSPs that relate to the material
being covered and compare the solution in the Study Guide to your attempt.

Based on past experience, successful students will need to work through all of these problems
numerous times in order to master all of the complicated tax concepts and technical calculations.
To be successful in this course, you need to work throughout the term and not leave learning
until it is too late. This course appears easier than it actually is! If you simply review the
assignment solutions, the concepts appear to be more basic than they actually are. However,
when you attempt problems yourself, the identification and application of concepts can be quite
challenging. Students often need to attempt problems multiple times before the concepts are
clear. Multiple attempts of these problems need to be done on different days to ensure the
concepts are being completely learned.

Following the “self study” problems at the end of each chapter, you will find a group of
“assignment problems” (APs). You should only attempt the assignment problems (APs) that
have been assigned to you because you will not have access to the solutions of APs unless
they have been assigned.

Beware of Academic Fraud


Academic Regulation 14 defines academic fraud as “any act by a student that may result in a
distorted academic evaluation for that student or another student. Academic fraud includes but
is not limited to activities such as:
a) Plagiarism or cheating in any way;
b) Submitting work not partially or fully the student’s own, excluding properly cited
quotations and references. Such work includes assignments, essays, tests, exams,
research reports and theses, regardless of whether the work is written, oral or another
form;
c) Presenting research data that are forged, falsified or fabricated;
d) Attributing a statement of fact or reference to a fabricated source;

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e) Submitting the same work or a large part of the same piece of work in more than one
course, or a thesis or any other piece of work submitted elsewhere without the prior
approval of the appropriate professors or academic units;
f) Falsifying or misrepresenting an academic evaluation, using a forged or altered
supporting document or facilitating the use of such a document;
g) Taking any action aimed at falsifying an academic evaluation.”1

The Telfer School of Management does not tolerate academic fraud. Please familiarize yourself
with the guidance provided at: http://web5.uottawa.ca/mcs-smc/academicintegrity/home.php

Also, please note that all materials prepared by the course professor
and used in the course, including lab manuals, class handouts and
exam papers, are protected by copyright. Copying or scanning them or
posting them on a website is therefore a violation of copyright and is
illegal.

Access Service for students who need adaptive measures


Students who have a disability or functional limitation and who need adaptive measures (changes
to the physical setting, arrangements for exams, learning strategies, etc.) to progress or
participate fully in university life should contact Access Service right away:
• By visiting our office on the third floor of the Desmarais Building, Room 3172
• By filling out the online registration form
• By calling us phone at 613-562-5976
Access Service designs services and implements measures to break down barriers to learning for
students with physical or mental health problems, visual impairments or blindness, hearing
impairments or deafness, permanent or temporary disabilities, or learning disabilities.

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ADM 4344A – Taxation II
Fall 2018
Tentative course schedule (subject to change)
PREPARATION PRIOR
CLASS DATE TO CLASS (ALL
SUBJECT CORRESPONDING EXERCISE
PROBLEMS AND SELF-STUDY
PROBLEMS SHOULD BE
ATTEMPTED BEFORE CLASS
(OR EARLIER!))*
1 Wednesday Sept Introduction, How to Succeed in Course Syllabus &
5 this course, Questions “Class 1 – 01
Powerpoint”
2 Friday Sept 7 Capital Cost Allowance Read Chapter 5 and do
all corresponding
exercise problems and
self-study problems

3 Wed Sept 12 Corporate Taxable Income Prepare Assignment


Problem 5-3
Read Chapter 12 (pages
581-587)*
4 Fri Sept 14 Corporate Taxes Payable & Prepare Assignment
Small Business Deduction Problem 12-3
Read Chapter 12 (pages
590-604)*
5 Wed Sept 19 M&P Profits Deduction, General Prepare Assignment
Rate Reduction Problems 12-7, 12-8
Read Chapter 12 – pages
604 – 609*
6 Fri Sept 21 Loss Carry Overs Prepare Assignment
Problem 12-10
Read Pages 514 – 520
and 587-590*
7 Wed Sept 26 Taxation of corporate investment Prepare Assignment
income – part 1 of 2 Problem 12-5
Read All of Chapter 13*
Tip: Have formula sheet
in front of you to speed
up reading. If you are
having trouble with the
reading, look at the
PowerPoint slides to get
high-level perspective.

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PREPARATION PRIOR
CLASS DATE TO CLASS (ALL
SUBJECT CORRESPONDING EXERCISE
PROBLEMS AND SELF-STUDY
PROBLEMS SHOULD BE
ATTEMPTED BEFORE CLASS
(OR EARLIER!))*
8 Fri Sept 28 Taxation of corporate investment Prepare Assignment
income – part 2 of 2 Problem 13-1
Chapter 13 (self-review
as required - entire
chapter)
9 Wed Oct 3 Corporate Taxation & Mgmt Prepare Assignment
Decisions Problems 13-3, 13-5
Read Chapter 15 Pages
711-734*
10 Fri Oct 5 Additional Chapter 15 Prepare Assignment
Assignment Problems Problems 15-3, 15-4, 15-
6
11 Wed Oct 10 Salary vs Dividend & Prepare Assignment
Shareholder Loans Problem 15-5
Read Pages 735-750*
12 Fri Oct 12 Acquisition of Control Prepare Assignment
Problems 15-7, 15-9
Read Pages 667 – 673*
13 Wed Oct 17 Associated Corporations Prepare Assignment
Problem 14-2
Read Pages 673-678*
14 Fri Oct 19 Integration & Shareholder’ Prepare Assignment
Equity & Distribution of Problem 14-4
Corporate Surplus Read Pages 682-695*
15 Wed Oct 31 Sale of an Incorporated Business Prepare Assignment
Problem 14-7
Read Pages 524-530,
830-838*
16 Fri Nov 2 GST/HST Prepare Assignment
Problem 17-8
Read Pages 969-983*
17 Wed Nov 7 GST/HST Prepare Assignment
Problems 21-3, 21-5
Read Pages 983 – 1003*
18 Fri Nov 9 Procedures and Administration Prepare Assignment
Problem 21-7
Read Chapter 2

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PREPARATION PRIOR
CLASS DATE TO CLASS (ALL
SUBJECT CORRESPONDING EXERCISE
PROBLEMS AND SELF-STUDY
PROBLEMS SHOULD BE
ATTEMPTED BEFORE CLASS
(OR EARLIER!))*
19 Wed Nov 14 Integration of tax competencies CPA Competency Map
and CFE Testing and CPA Competency
Map Knowledge
Supplement for taxation
(optional) (available
online)
20 Fri Nov 16 Introduction to Residency, Non- Pages 18-29, 334-335,
resident tax payers, Foreign tax 609-612, 927-943*
credit, Tax Treaties
21 Wed Nov 21 Course Evaluation at start of Assignment Problems
class; Lecture on Joint ventures 20-1, 20-5
and partnerships Bring electronic device
to class for course
evaluation
Read pages 849-854*

22 Fri Nov 23 Tax on split income, affiliation Prepare Assignment


rules, Introduction to Rollovers Problem 18-3
Read pages 533-535,
759, 766-768, 777-784,
805-808*
23 Wed Nov 28 Share for Share Exchanges and Read pages 805-816*
Exchange of Shares in a
Reorganization
24 Fri Nov 30 Take up remaining assignment Prepare Assignment
problem Problem 17-2

* NOTE: IN ADDITION TO SPECIFIC PREPARATION NOTED IN THE TABLE


ABOVE, ALL EXERCISE PROBLEMS AND SELF-STUDY PROBLEMS THAT
CORRESPOND TO THE READINGS SHOULD BE ATTEMPTED PRIOR TO THE
CLASS WHERE THE TOPIC IS BEING COVERED. STUDENTS SHOULD USE
CLASS TIME TO REVIEW AND REFINE THEIR KNOWLEDGE. IT IS NOT
RECOMMENDED TO USE CLASS TIME TO START YOUR PREPARATION ON THE
TOPICS BEING COVERED.

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