Q&A today's Master Quicken Software Part 1/4 January 2, 2013

If you missed Part 1, it's possible to purchase the recording of the live event now
www.taxdetective.ca/quicken.html

and that may persuade you to register for the next three weeks of webinars on Wednesdays at 1 pm for an hour (Pacific Time) ... www.ipbc.ca

Today was a really good introduction to how to open a new file while interviewing your client, managing accounts, categories, what the registers look like, how the report specifications work, and why you'd use this nifty program that's been around since the early 1980's to account for your net worth, manage your finances, deal with estates orto help you act as a Power of Attorney.

There weren't very many questions as the feedback was that they were all too busy listening to question me.  One comment was that they were all just concentrating on me.

But the last question, emailed after the event ended was a dilly...

Q: Were do you set currency? How do you show the native currency and statement currency?

A: You set currency on the currency list, and you can update by downloading automatically. The currency is shown on the reports by customizing the reports.

Q: I had a client who incorrectly entered rental property income and expenses in different currencies. CRA couldn't follow. I couldn't help. Client was in big trouble. Properties were in Mexico, Arizona and Calgary. Pesos, USD and CDN

A: I would recommend re-entering in three separate data files and using those currencies to record in the registers, then converting separately. I find that Quicken is almost too complex to use for multi-currency. In fact, I'd recommend using QuickBooks as it handles multi-currency much more effectively than Quicken does.

Q: You mentioned attribution. What is that?

Please call me right away, because I may throw up*>*>*>!!!

A: Yes, attribution rules have caused some extreme emotional reactions over my 27 years of practicing tax. And I"m not alone, for example, the Lipson case is a very famous court case that made it's way all the way to the Supreme Court of Canada

Here's the Federal Court of Appeal decision http://canlii.ca/t/1qzrq
and the Supreme Court decision http://canlii.ca/t/221n0
and some other decisions cited http://www.canlii.org/en/ca/scc/doc/2009/2009scc1/2009scc1.html
Lipson, Canada Trustco, Ludco, Singleton, Thibaudeau, all names you'll hear in Tax Updates if you attend Ed Kroft's updates (he was the lawyer for the Lipson's at the Supreme Court)

Attribution of income is where one person attempts to split the income from their own assets with someone else who doesn't own that asset. I talked about attribution today because it's necessary to keep straight the ownership of accounts and assets earned or received as gifts in order to ensure that the right person is being attributed with the income from those accounts or assets. Same goes for attribution of interest expense that is attributable to interest or other asset income.

Attribution rules can be seen to be extreme. For example, if grandpa gifts his grandson a bike, and grandson earns money from that bike via a paper route, there could be a consideration required for whether the income was earned by the ownership of the bike. I once had a grandpa go totally berserk when he read the rules (I just gave him the stuff to read and this was how he interpreted it all on his own) He proceeded to write to the Prime Minister and the Finance Minister demanding that the attribution rules be re-written because he believed this was very wrong.

It's often why it's a bad idea to gift Canada Savings Bonds, as the same rational applies. The interest attributes back to the gift giver. The interest earned on that interest however, would not be attributed back. It can be used in reverse though, to gift someone something and have the income attribute back can be a good thing where the person didn't have other income and has credits they can't use or transfer.

There are tax rules about the income from an asset you own attributing back to you. It's complicated and that's putting it mildly...

A good place to start is with IT 511 Interspousal and certain other transfers and loans of property
http://www.cra-arc.gc.ca/E/pub/tp/it511r/README.html

Then there's IT 421 Benefits to individuals, corporations and shareholders from loans or debts
http://www.cra-arc.gc.ca/E/pub/tp/it421r2/README.html

from there you might want to review the rules on 'kiddie tax'
http://www.taxdetective.ca/kiddie_tax.html
(one of the many pages of links found in my TaxLinks Pro Portal subscription)

and I'm sure there's many more references, and court cases...search under Google or visit www.canlii.org

In February 2010 at a CGA/CRA liaison meeting in Surrey Tax Office, attribution was mentioned as a new initiative in the audit for trusts and other taxpayers
http://www.taxdetective.ca/newsletters/newsletter/1482040/70887.htm

In 2007, CGA Canada magazine, an article on attribution and trusts
http://www.cga-canada.org/en-ca/AboutCGACanada/CGAMagazine/2007/Sep-Oct/Pages/ca_2007_09-10_prof_taxstrategy.aspx

Keith Anderson, CA writes about attribution (it's also referred to as income splitting) because it can be a tax trap:
http://www.cabusinessadvisor.com/Tax/TaxTraps/TaxTraps.htm
and here's what he says about attribution:
http://www.cabusinessadvisor.com/Tax/TaxTraps/Attrib.htm