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However, all of the directors are residents of Ontario and all meetings of the Board of Directors have been held in that province since incorporation. Barbara has found that when particularly important, high value packages are involved, some of her clients require the package to be hand delivered in an awe-inspiring style. She is not eligible for the first-time donor's super credit. Assume the following changes are proposed: Coffee expects you to deal with the matter quickly. This balance resulted from the purchase, several years ago, of an unlimited life franchise. The automobile was used by Mr.
The instalments are due on March 31, June 30, September 30, and December Case D 1. As the corporation is not a small CCPC, monthly instal- ments are required. The instalments would be due on the last day of each month, beginning in January. The alternatives and the relevant calculations are as follows:. Part B If the Company failed to make instalment payments towards the taxes payable, it would be liable for interest from the date each instalment should have been paid to the balance due date, December 31, The rate charged would be the one prescribed in ITR for amounts owed to the Minister, the regular rate plus 4 percentage points.
There is a penalty on large amounts of late or deficient instalments. This penalty is specified in ITA While detailed calculations are not required, we would note that this penalty would be applicable in this case.
There is also a penalty for late filing. If no return is filed by the filing date, the penalty amounts to 5 percent of the tax that was unpaid at the filing date, plus 1 percent per complete month of the unpaid tax for a maximum period of 12 months.
This penalty is in addition to any interest charged due to late payment of instalments or balance due. In addition, interest would also be charged on any penalties until such time as the return is filed or the instalments balance due paid.
The late file penalty could be doubled to 10 percent, plus 2 percent per month for a maximum of 20 months for a second offence within a three year period. Part A Accountant X is not liable for participating in an understatement of Client A's taxes payable because Accountant X did not know the expense receipt was personal in nature, and would not be reasonably expected to know, but for circumstances amounting to culpable conduct, that this was the case.
This is because X relied in good faith on the information provided by A. Part B Based on these facts, Accountant X would be liable for a third party penalty. However, if Accountant X had determined that there was a reasonable basis upon which the Tax Court decision could be overturned by a higher court, the penalty would not apply.
Given that the size of the dona- tion is so disproportionate to Z's apparent income as to defy credibility, to EFILE the return without verifying the amount of the receipt would show an indifference as to whether the Act is complied with or would show a wilful, reckless, or wanton disregard of the law. For each of the following cases, indicate the taxation year in which the Company could deduct the bonus, as well as the taxation year in which Ms. Betz would have to include it in her taxable income.
Case A The bonus is paid on November 1, Case B The bonus is paid on January 1, Case C The bonus is paid on June 30, Case D The bonus is paid on January 1, Self-Employed Farnham Ltd. For employees, the cost of providing benefits pension plan and extended health care is about 8 percent of gross wages. The tax applies to all wages and salaries with no upper limit.
Tamira Vines is a salesperson for Compudata Ltd. As her work requires her to travel extensively throughout southern and central Saskatchewan, the Company provides her with an automobile. Saskatchewan does not participate in the HST program and has a provincial sales tax which is assessed at a rate of 5 percent. During the period January 1, through May 31, , the car was driven 38, kilometers for employment related purposes and 3, kilo- meters for personal use.
Vines was involved in an accident in which the Acura was destroyed. Vines was hospitalized and was not able to return to work until July 1, When she returned to work on July 1, , the Company provided Ms. Vines with a Ford Taurus. These were paid for by the Company.
During this period, Ms.
Vines drove the car 15, kilometers for employ- ment related purposes and 14, kilometers for personal use. Calculate the minimum taxable car benefit that will be included in Ms. Self Study Problem Three - 4 Taxable Automobile Benefits During the current year, the Carstair Manufacturing Company provides automobiles for four of its senior executives, with the value of the cars being in proportion to the salaries which they receive.
While each of the individuals uses their car for employment related travel, they also use them for personal matters. The portion of personal use varies considerably among the four individuals. When the car is not being used by the employee, the Company requires that it be returned to the corporate premises.
The details related to each of these cars, including the amount of personal and employment related travel recorded by the executives, are as follows: Sam Stern Mr. The car was new last year and, during the current year, it was driven a total of 38, kilome- ters.
Of this total, only 6, kilometers were for employment related purposes, while the remaining 32, were for personal travel. Stern made an extended trip outside of North America, the car was used by Mr. Stern for 8 months during the current year. During the period when he was outside North America, the Company required Mr. Stern to return the car to the Company garage. Sarah Blue Ms. Blue is the vice president in charge of marketing and has been provided with a Corvette. During the current year, the car was driven a total of 60, kilometers, with all but 5, of these kilometers being for employment related purposes.
The car was used by Ms. John Stack Mr. During the current year, Mr. Stack drove the car 42, kilometers for employment related purposes and 10, kilometers for personal travel. Stack throughout the current year. In order to reduce his taxable benefit, Mr. Alex Decker Mr. Decker, the vice president in charge of industrial relations, chose to drive a Lexus. Decker drove the car 90, kilometers for employment related purposes and 8, kilometers for personal use. During the period when he was ill, the Company required Mr.
Decker to return the car to the Company garage. Calculate the minimum amount of the taxable benefit for the current year that will accrue to each of these executives as the result of having the cars supplied by the Company. From the point of view of tax planning for management compensation, provide any suggestions for the Carstair Manufacturing Company with respect to these cars. ML , a Canadian public company. He is not required to use an automobile in carrying out his employment duties.
In and , ML has provided John with a car with ML paying all of the operating costs of the car. John uses the car exclusively for personal travel. If he chooses to purchase the car, ML will no longer pay the operating costs. John expects that, whether he chooses to purchase the car or not, he will use the car for two more years, and He expects to drive the car about 40, kilometers in each of the two years.
On the basis of undiscounted cash flows, advise John as to whether he should purchase the car assuming: Thomas Malone is employed by Technocratic Ltd. Because of an outstanding performance in his division of the Company, he is about to receive a promotion accompanied by a large increase in compensation. He is discussing various possible ways in which his compensation might be increased without incurring the same amount of taxation as would be assessed on an increase in his salary.
The funds will either be used to purchase a cottage in which case any interest on related loans will not be deductible to Mr. Malone, or used to purchase investments in which case any interest on related loans will be deductible to Mr. Other relevant information is as follows: It is subject to taxation at a 25 percent rate.
Evaluate Mr. How will the deductibility of the interest affect your conclusion? On June, 1, , Ms. Wu exercises all of these options. At this time, Imports Ltd. On January 31, , Ms. Wu sells the 12, Imports Ltd. For each of the following Cases, calculate the tax consequences of the transac- tions that took place during , , and on both the Net Income For Tax Purposes and the Taxable Income of Ms. Where relevant, identify these effects separately.
Case A Imports Ltd. Case B Imports Ltd. When Ms. On November 1, , Ms. Indicate the tax effect on Ms. Balzac of the transactions that took place during , , and under each of the following independent Cases.
Borden Ltd. The options were exercised on October 1, Maritime Trust is a large public company and, as a consequence, Mr. Jurgens felt that he did not have the opportunity to exhibit the full range of his abilities. To correct this situation, Sam decided to accept employment in Toronto effective July 1, as the general manager of Bolten Financial Services, a Canadian controlled private corporation specializing in providing financial advice to retired executives.
In April, , prior to leaving Maritime Trust, Mr. He is still holding these shares on December 31, Jurgens exercises these options and acquires 1, shares. It is his intent to hold these shares for an indefinite period of time.
Because there is extensive travel involved in the position with Bolten Financial Services, the Company has provided Mr. Between July 1 and December 31, , Mr. Jurgens drove this car a total of 25, kilometers, of which 15, kilometers were clearly related to his work with Bolten Financial Services. No interest was charged on this loan. During the year, Mr.
Assume that the relevant prescribed rate through all of is 2 percent. Sarah Kline is a copy editor for a major Canadian publisher. For the taxation year, Ms. Other Information: During , Ms. Kline is provided with an automobile that has been leased by her employer. The car is used by her for 11 months of the year and, during the month of non-use, she is required to return the vehicle to her employer's premises.
During , she drives it a total of 40, kilometers. Of this total, 37, kilometers were for travel required in pursuing the business of her employer, and the remainder was for personal use. Kline was hospitalized. On June 6, , Ms. Kline exercises the options. She is still holding the shares on December 31, Calculate Ms. Sandra Firth is a commission salesperson who has been working for Hadley Enterprises, a Canadian public corporation, for three years.
The following amounts were withheld by Hadley Enterprises from Ms. Note Two Ms. Firth is covered by a comprehensive disability plan which provides peri- odic benefits during any period of disability to compensate for lost employment income.
However, as of , Ms. Firth was hospitalized for the month of March. Note Three Hadley Enterprises provides Ms. During , she drove the car 92, kilometers, 7, of which were personal in nature. Firth was hospitalized during the month of March see Note Two , her employer required that the car be returned to their premises. Note Four Ms.
The loan must be repaid by December 31, All of the interest that is due on the loan for is withheld from Ms. This loan does not qualify as a home relocation loan. Assume that during all of , the prescribed rate was 2 percent.
At Christmas, the Company gives all of its employees a mini iPad. The Company deducts this amount in full in its corporate tax return. Firth received stock options from Hadley to acquire 1, shares of its common stock. Firth exercises her options to acquire 1, shares. She is still holding them at the end of the year and has no intention of selling them. The Company provides Ms. Firth with a membership in the Mountain Tennis Club.
During the year, Ms. The Company does not reimburse her for these entertain- ment costs. Firth had travel costs related to her employment activities as follows: Provide reasons for omitting items that you have not included in your calculations. Jones is a salesman handling a line of computer software throughout Western Canada. He does not receive an allowance from his employer for any of his expenses. Jones made the following employment related expenditures: Jones had leased for several years.
During , Mr. Jones drove the car a total of 50, kilometers, of which 35, kilometers were for employment related purposes.
In addition to expenditures to earn employment income, Mr. Jones has the following addi- tional disbursements: Jones with a one week vaca- tion at a northern fishing lodge. Determine Mr. Worthy is a commissioned salesman and has asked for your assistance in preparing his income tax return for the current year. He has provided you with the following information: Twenty percent of the milage on the car is for personal matters.
He is required by his employer to maintain an office in his home and is eligible to deduct work space in the home costs. Worthy has received no reimbursement from his employer for any of the amounts listed. Calculate Mr. Assume Mr. He immediately applied for a number of jobs and accepted a position as a financial planner in the Ottawa office of Oxford Associates Ltd.
Oxford Associates Ltd. Once he had signed the contract with Oxford Associates, plans were made to sell the house he owned in Red Deer. Unfortunately, the home remained unsold when he moved on March 8, He arrived in Ottawa on March 16 and moved into an apartment he had rented on a monthly basis until he could arrange to purchase a home.
Rent payments were required from April 1. Mitch began work on April 1, and eagerly awaited the arrival of his long-time girlfriend Janice Masters from Alberta.
Shortly after her arrival in Ottawa, Mitch and Janice were married on November 29, As a result, Oxford Associates will sign form T stating Mitch is required to pay for certain employment expenses without reimbursement and use a portion of his home for work. He has set aside a small room in his rented apartment which is used exclusively to meet with clientele. Mitch is also provided with an automobile to use in his work. Mitch is compensated by salary with a bonus and stock option arrangement.
The bonus is based on overall company profits. The stock option is available to all employees depending upon level of service and overall job evaluation. After Mitch accepted, he received the cheque in February, The Company withheld the following amounts from his salary: A few months into the new job Mitch became quite depressed. His employer suggested he take advantage of the company assistance program.
He went to four appointments in October and November and felt much better. Oxford Associates provides group medical coverage to all of its employees. Half of the amount was contributed by his employer and the balance from other employees. Oxford Associates discovered years ago that many existing clients frequent certain recre- ational and sporting clubs.
To encourage contacts with potential clients, employees have their choice among five such clubs. Since Mitch enjoys squash, he chose a free member- ship at a local squash club. Since he had no previous work experience, the banks were reluctant to provide him a mortgage at favour- able terms. Mitch agreed to reduce his salary slightly with respect to this benefit.
The loan is required to be paid if Mitch dies, sells the home or terminates his employment. Assume that the prescribed interest rates for such benefits are 2 percent in each of the first two quarters of and 1 percent in the third and fourth quarters.
Oxford instituted a stock option plan for its employees in The plan eligibility requires six months of service. Employees are permitted to acquire a limited number of option shares at 20 percent below their fair market value on either May 1 or November 1.
The company hires valuators to determine the fair market value at each of those dates. Low on cash and wanting to buy Janice a nice wedding ring, he is forced to sell 80 of the shares. Oxford Associates has an arrangement with a local dealership to lease a minimum number of new automobiles each year at favourable rates.
Mitch receives his leased automobile May 1, It has kilometers on it when it is received. The odometer reads 19, kilometers on December 31, Mitch estimates that he drove 5, kilometers for personal purposes, including drives to and from home to the office.
Mitch prepared a separate room in his apartment to be used exclusively for a home office. He used the office space between June 1 and November 30, A home office was not ready in his newly purchased home until February, The apartment office space is exactly square feet.
The total apartment space is 1, square feet. Home office related costs are as follows:. Provide explana- tions for all amounts including reasons for omitting items not included in your calculations. Carl Lange is the president of Lange Enterprises Inc. The Company has a September 30 year end. For each of the following cases, indicate the taxation year in which the Company can deduct the bonus, as well as the taxation year in which Mr.
Lange will have to include it in his taxable income. The three cars are identical. When the car is not being used by the employee, the Company requires that it be returned to its premises. For each of the following cars, calculate the minimum taxable benefit to the employees for the current year ending December It is used by Aaron Abbott for the whole year.
He drives it for personal purposes for a total of 9, kilometers. It is used by Babs Bentley for 11 months of the year. It is used by Carole Cantin for 10 months of the year. She drives it for personal purposes for a total of 7, kilometers. She is discussing a compensation package with her future employer, HER Ltd. Lee is contemplating a major cash outlay. She plans to completely renovate a commercial property that she owns.
Because she will be using the loan for income producing purposes, any interest on the loan will be deductible to Ms. HER Ltd. It is subject to taxation at a 28 percent rate. Assume that the relevant prescribed rate is 2 percent. Evaluate, from the point of view of the cost to the Company, Ms. Assume that the cost of the renovations will be fully deductible in the year in which they are made.
Marian Bytech is an employee of Merlin Industries Ltd. On August 1, , all of the options are exercised. Bytech with respect to the granting of the options, their exercise, and the sale of the shares under each of the following independent assump- tions. Merlin Industries Ltd. Vera Smiles is a sales representative for a Canadian controlled private corporation that manufactures office furniture. For the taxation year, Mrs. During , Mrs.
Smiles is provided with an automobile that has been leased by her employer. The car is used by her for ten months of the year and, during the period of non-use, she is required to return the car to her employer's premises.
During , she drives it a total of 67, kilometers. Of this total, 63, kilometers were for travel required in pursuing the business of her employer, and the remainder was for personal use. Smiles was hospitalized for a month. On July 1, , Mrs. The loan requires annual interest payments at a rate of 1 percent and Mrs. Smiles pays the interest for on January 18, Assume that at the time the loan was granted and for the remainder of the year, the prescribed rate was 2 percent.
The loan is still outstanding at the end of the year. On June 1, , Mrs. Smiles exercises the options. She does not plan to sell the shares for at least 2 years. During the year, Mrs. Smiles traveled extensively on business. Her employer reimbursed her fully for these costs on presentation of the receipts. Calculate Mrs. Deduction Inclusion Lange Enterprises Inc.
It is taxed when received.
As a conse- quence, it cannot be deducted until the year ending September 30, This means it does not have to be included in Mr. In Case D, the bonus is not paid until more than 3 years after the end of the calendar year in which Mr. Lange rendered the services. This makes it a salary deferral arrangement, resulting in Mr. Lange having to include it in his Taxable Income. Lange Enterprises will deduct the bonus in the fiscal year ending September 30, SSS Solution Three - 2 With respect to Cars B and C, employment related usage was more than 50 percent of total usage and, as a consequence, there is an available reduction in the standby charge, as well as an alternative calculation of the operating cost benefit.
For Car A, the employment related use is less than 50 percent and, as a consequence, there is no alternative calculation of either the standby charge or the operating cost benefit. SSS Solution Three - 3 Approach The appropriate comparison in evaluating the interest free loan arrangement would be to determine the cost to the Company of providing the loan, and then to compare this amount with the cost of providing an equivalent benefit in the form of straight salary.
Lee with the financing required, assuming she is not a shareholder. Lee can borrow on a loan at a rate of interest of 5 percent.
Because the interest on the loan can be deducted, there would be no tax consequences associ- ated with receiving this amount of additional salary. The cost of the additional salary to the company would be calculated as follows: However, under ITA As she is using the funds provided to produce rental income, the full amount would be deductible, resulting in no net change in taxes.
Given this, the analysis of this alternative only requires looking at the cost of the loan to the company: The major factor that pushed the outcome in this direction is the high rate of return that HER expects on invested funds. The results for this year would be as follows: Case B As the option price at the time of the grant is less than the fair market value of the shares on that date, no deduction is available under ITA 1 d.
Further, as Ms. Bytech has not held the shares for two years, no deduction is available under ITA 1 d. Given this, the required information under the assumption that Merlin Industries Ltd. The taxable capital gain would be calculated as follows: Case D As the option price at the time of the grant is less than the fair market value of the shares on that date, no deduction is available under ITA 1 d.
Further, as Merlin Industries Ltd. Given this, the required information is as follows: Note Two Based on the fact that Mrs. While most students will use the quarterly calculation, the use of actual days would result in the following acceptable alternative: Note Four As a Canadian controlled private corporation is involved and she is still holding the shares, Mrs. Smiles does not recognize an employment income inclusion in Note Five Since all of her travel and entertainment costs were reimbursed based on actual receipts, there is no effect on her income.
Her employer will have to apply the 50 percent limit on meals and entertainment to the reimbursed costs. Neither person has any tax credits other than the personal or common-law partner credit. This problem will consider three different Cases involving alternative levels of Taxable Income for each individual as follows: Self Study Problem Four - 2 Personal Tax Credits - 5 Cases In each of the following independent Cases, determine the maximum amount of personal tax credits, including transfers from a spouse or dependant, that can be applied against federal Tax Payable by the taxpayer.
Ignore, where relevant, the possibility of pension income splitting. Their son is 24 years old and, because of a physical disability, continues to live with them. He has no income of his own. His disability is not severe enough to qualify for the disability tax credit.
They have three children aged 6, 10, and All of the children are in good health and none of them have income of their own. They have three chil- dren, ages 10, 14, and All of these children are in good health and continue to live at home. During the current year, Ms. Crawford pays the following medical expenses: Austin Schneider was divorced from his wife several years ago.
He has custody of their four children, ages 5, 8, 11, and The children are all in good health. Only the 14 year old child had any income for the year. Wanda Sykes is 42 years old. The following five independent Cases make varying assump- tions for the taxation year with respect to Ms. In all Cases, Ms. In all Cases where Ms. Case A Ms. Sykes is a single mother. She has a son, John, who is 10 years old and lives with her. All of Ms. Sykes attends university for 10 months of the year on a part time basis.
Sykes is not married and has no dependants. All of her income is from employment. She is not eligible for the first-time donor's super credit. Case C Ms. All of her income is from rental properties. They have one child, Martin. He is 10 years old, has no income of his own, and qualifies for the disability tax credit. He is not mentally or physically infirm. Case D Ms. All of her income is employment income.
Wanda and Buff have two children, Janice who is 10 years of age, and Mark who is 20 years of age. Both chil- dren are in good health. As Mark has been unable to find full-time employment, he still lives at home. Janice had no income during the year. Sykes paid for the following medical expenses: Case E Ms. Sykes is married and her husband, Buff is 66 years old.
Wanda and Buff have two children, a son aged 12 and a daughter aged Both children are in good health and have no income of their own. Buff is disabled and qualifies for the disability tax credit. He is not eligible for OAS. In each Case, calculate Ms. Indi- cate any carry forwards available to her and her dependants and the carry forward provisions. Ignore any tax amounts that Ms. Sykes might have had withheld or paid in instalments.
Dennis Lane has been a widower for several years. Lane has three children, aged 10, 12, and They all live with him in his principal residence. He paid no other medical expenses during the year. John Barth has been employed for many years as a graphic illustrator in Kamloops, British Columbia.
His employer is a large publicly traded Canadian company. As he was in no immediate need of additional income, he arranged with his employer that none of this bonus would be paid until , the year of his expected retirement. For the taxation year, the following items were relevant. Barth is provided with an automobile owned by his employer. Barth drove the car a total of 10, kilometers during the year, of which only 4, kilometers were related to the business of his employer.
The automobile was used by Mr. Barth for ten months of the year. During the other two months, he was out of the country and he was required to leave the automobile with one of the other employees of the corporation. Barth with respect to his personal financial situation. In order to assist Mr. The loan was granted on October 1 at an interest rate of 1 percent. Assume that, at the time the loan was granted and throughout the remainder of the year, the relevant prescribed rate was 2 percent.
On June 6, , when Mr. Barth lives with his wife, Lynda. Lynda is blind and qualifies for the disability tax credit. His 22 year old dependent daughter, Marg, is a full time student for 8 months of the year.
She has agreed to transfer the maximum tuition amount to her father. Barth paid the following medical costs during the year: Because of donations in previous years, he does not qualify for the first-time donor's super tax credit.
Calculate, for the taxation year: Samuel Kern is an administrator for a publicly traded Canadian manufacturing company. Kern is provided with an automobile that has been leased by his employer. The car is used by him for 9 months of the year and, during the months of non-use, it must be returned to the premises of his employer. During , he drives it a total of 32, kilometers. Of this total, 29, kilometers were for travel required in pursuing the business of his employer and the remainder was for personal use.
The plan provides periodic benefits that compensate for lost employment income. On June 1, , Mr. Kern exercises the options. He is still holding the shares at the end of the year. He has found the donation receipt in his files.
He is not eligible for the first-time donor's super credit. Kern lives with his wife and 23 year old son, David. Kern paid the following medical costs: Calculate, for the taxation year, Mr. Indicate any carry forwards available to him and his depend- ants and the carry forward provisions. Ignore all GST considerations. Lance Strong is a skilled carpenter who has been employed by a large public company for 2 years. His disability plan provides periodic bene- fits that are designed to compensate for lost employment income.
Strong is married and has two children aged 14 and Neither child has any income during She is not mentally or physically infirm. Strong is provided with an automobile by his employer.
During , it is driven 32, kilometers, of which 15, are employment related. Strong for 10 months during During the 2 months that he did not use the automo- bile, he was required to return it to his employer's garage.
During 8 months of , Mr. Strong was in part time attendance for two university courses. The first course was devoted to 16th century liturgical chants and the second was a course in spoken French. The employer was particularly interested in the French course as it would allow Mr.
Strong to deal more effectively with francophone clients. When Mr. Strong began working for his employer in the previous year, he put his house on the market. Due to a major rezoning issue, his house did not sell until It must be repaid in full on April 1, Assume that during the first two quar- ters of the prescribed rate was 2 percent and that during the last two quarters it declined to 1 percent.
Strong pays for the following eligible medical costs: He does not qualify for the first-time donor's super tax credit. Based on your answer in Part B, determine Mr. Ignore any amounts that might have been withheld by his employer or paid in instalments. Andrew Bosworth works for a publicly traded company. None of the bonus will be paid until January, During , his employer withholds the following amounts from his salary: Bosworth is married and has two children.
As Mr. His 19 year old son attends a local university and lives at home. The ancillary fees were charged to all students attending the university. He has agreed to transfer the maximum tuition amount to his father. Other Information 1. During , the automobile is driven a total of 62, kilometers, of which 41, involve employment related activi- ties.
Bosworth throughout In , Mr. This was the market price of the shares at the time the options were granted. Bosworth exercises all of these options. He is still holding the acquired shares at the end of Bosworth is not reimbursed for advertising, entertainment or travel costs. In addition to the operating costs for his vehicle, he paid for the following employment related costs: Bosworth pays for the following medical expenses during Because of his ongoing interest in Elizabethan drama, Mr.
The duration of the course was 4 months. Bosworth is not eligible for the first-time donor's super credit. SSS Problem Four - 1 Personal Tax Credits - 5 Cases In each of the following independent Cases, determine the maximum amount of personal tax credits, including transfers from a spouse or dependant, that can be applied against federal Tax Payable by the taxpayer.
They have three children aged 7, 9, and All of the children are in good health. None of them have income of their own.
Marion Barkin was divorced from her husband several years ago. She has custody of their three children, ages 9, 12, and Only the 15 year old child had any income for the year. Their son is 22 years old and, because of a physical disability, continues to live with them.
This total is made up of OAS payments and pension income from her former employer. Ignore the possibility of splitting Sarah's pension income. They have three children, ages 14, 16, and Land pays the following medical expenses: Each case involves various assumptions as to the amount and type of income earned by Mr.
Bob Barnes during , as well as to other information that is relevant to the determination of his Tax Payable. In those cases where we have assumed that the income was from employment, the employer withheld the maximum EI premium and CPP contribution.
Bob qualifies for the first-time donor's super credit. He is not married and has no dependants. They have an adopted son who is 19 years old and lives at home. He is divorced and has been awarded custody of his 21 year disabled son. The son quali- fies for the disability tax credit. Case 4 Bob and his wife Gabrielle are both 67 years of age. Gabrielle is sufficiently disabled that she qualifies for the disability tax credit.
The components of the income earned by Bob and Gabrielle are as follows: They have a 20 year old son who lives at home.
He is dependent because of a physical infir- mity. However, he is able to attend university on a full time basis for 8 months during He agrees to transfer the maximum tuition amount to his father.
His wife died last year. He has two children. Summer is 12, is in good health, and has no income during the year. His son, Martin is 15 and is physically infirm, but not sufficiently to qualify for the disability tax credit.
They have no children. However, they provide in home care for Gabrielle's father who is 62 years old, dependent because of a physical infirmity and has no income of his own.
Also living with them is Bob's 67 year old father. Indicate any carry forwards available to him and his dependants and the carry forward provi- sions. Ignore any amounts Bob might have had withheld or paid in instalments. Angelina Bradmore is a very successful salesperson for a large publicly traded company. During , her employer withholds the following amounts from her salary:. Bradmore is divorced and has custody of her 12 year old son and 10 year old daughter, both of whom live with her.
Her daughter, who is legally blind, has no income of her own during During , the automobile is driven 53, kilometres, of which 48, were for employment related activities. Bradmore pays all of the oper- ating costs for the car. The automobile was used by Ms. Because of the high level of her salary, Ms. Bradmore is required to pay her own adver- tising and travel costs. In addition to the operating costs for her vehicle, she paid for the following employment related costs: Bradmore exercises all of these options.
She is still holding the shares at the end of the year. Her employer provides all employees with gifts on their birthday. Bradmore makes some amount of charitable contributions each year, she is not eligible for the first-time donor's super credit.
Bradmore pays for the following medical expenses during In order to improve her ability to deal with people, Ms. Bradmore enrolled in a part time, human resources program at a local university. Determine Ms. Ignore any amounts that might have been withheld by her employer or paid in instalments. Brown will qualify for the following credits: Barkin will qualify for the following credits: Note The eligible dependant credit can be taken for any child.
It should not be claimed for the 15 year old as the amount of the credit would be reduced due to his income. Appleton will qualify for the following credits: Pale will qualify for the following tax credits: Note that, because her income is below the income threshold, there will be no claw- back of Ms. Land will qualify for the following tax credits: Note The claim for medical expenses is determined as follows: Note As none of his income is taxed at 33 percent, this rate will not be applicable to the calculation of the charitable donations tax credit.
Case 2 The solution for this Case is as follows: Note The base for the medical expense tax credit would be calculated as follows: Case 3 The solution for this Case can be completed as follows: Case 4 The solution for this Case is as follows: Case 5 The solution for this Case can be completed as follows: View larger cover.
Suggested retail price: This text is appropriate for one- or two-term courses covering personal and corporate taxation. Written in an accessible style, this text assumes that the student has no previous education in taxation. The Income Tax Act is referenced in the text where appropriate for further independent study. Students should be able to solve all of the end-of-chapter material by relying solely on the text as a reference.
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