TAX Case

Were you being a tax professional work for A & B tax consultant corp. Victoria, new client ask you to he
She wants to know her max RRSP deduction, and she wants to use it all to reduce her taxes. Also, she wa
Tax Purpose, her minimum Taxable Income, and her minimum Federal tax Payables. Finally, she needs t
She provides you with the following information:
Please DO NOT add or change numbers, DO NOT change formatting or delete any line below this

1 In the last 10 years, Victoria has worked for Alberta co. publicly traded corp. and her 20X8 Net Income f
this include employment income 13,419 after deduct 1,342
Also, at the end of 20X8, her unused deduction room was 4,026

2 In 20X9 she receives 40,256 gross salary of that 30,256

Her employer deduct and withheld the following:

Federal Income Tax 6,038

Canada Pension Plan contributions 1,610
Employment Insurance Premiums 443
Registered Pension Plan Contributions 2,013
Donation to United Way charity 322
Professional Dues 403
Contribution to Disability Pension Plan 900
Use of business (employer) vehicle 1,200
Victoria employer match contribution of 2,013 RPP and
The plan was started 10 years ago, and the annual premiums never changed ($1,800 a year), (at Dec 31, 20

3 During 20X9, she receives 2,684 from her disability plan, while she is in hospita

4 Her employer provides her with a car purchased last year for 20,128
she was in hospital for 31 days in Mar 20X9 (during that time employer have the keys for the car).
During 20X9 the car was driven total of 62,000 of that

5 On April 1, 20X9 Victoria receives options from her employer to buy 1,000
Victoria exercises her option on Sept 15, 20X9 when the share price was 40
commission for CIBC Investor Edge, to handle this transaction.

6 Years ago, Victoria plans to move to Edmonton to be close to schools for her children, in 20X1 she won
immediately (in 20X1) she purchases two houses, first home for 290,000
where she used to live. In 20X9 her daughter stayed in Edmonton house while she is attending University
as he believes the houses will appreciate in the coming years in Edmonton. In April 20X9 she sold the sec
she fill out form T2091 based on her accountant's advice and designated the Edmonton house as the princi
 7 In April 20X9, Victoria moves to Edmonton, here employer help her to be transferred to Edmonton branc
She drove 155 km in here Van, with here 3 children and husband, and she pays the moving
to move here household to Edmonton. The moving company delays the delivery due to drivers’ strike, she
and pays 300 per night not including meals (she provides you with the receipts). Alberta co

8 In Oct 1, 20X8, she opens a term deposit account, and she deposited 36,230

9 In 20X9 she receives 17,000 non eligible dividend from taxable Canadian corp.

10 She owns rental property, capital cost 322,046 UCC on Jan 1, 20X9 was
(the property in class 1 4% CCA rate and she will claim the max CCA) max CCA if po

11 On June 20X9 she sold a vacant land for 201,279 she received 20,128
She paid selling and legal expenses amount of 7,000

12 April 1, 20X9 Victoria sold 2,000 shares of River Ltd. for 20

The original of the shares; she had inherited 1,500 of the shares from her late father in 20X5. Her
and the fair market value at the time of his death was 11 per share. Also, In 20X6 Victoria

13 Victoria currently married to Tom and they have 3 children (Sun 3 years old, Moon 9 years old and Star 1
While you discussing this tax return, Victoria told you that Tom is her second marriage and his employme
1,500 a month includes 300 for child support, she provides you with documentation con

14 Victoria and Tom employed and paid daycare 20,480 for child care expenses
also during summer they send Sun and Moon to a summer camp for 4 weeks which cost

15 After Christmas party, police stopped Tom and fine him with a 2,000
Tom did not have money to pay and this fine paid by Victoria, she want to deduct it if possible

16 During 20X9 the family total medical expenses paid by the Tom was 12,345

17 Star is full time student in the University of Alberta; she attends 8 month during 20X9 full time and her tu
she has no income and all her expenses paid by her parents. Victoria provides you with form signed by S

18 You learned that Victoria has balances carried over from prior years, she plans to deduct them if possible
Charitable donation from 20X1 3,200
Non capital losses from 20X5 3,800
Net capital losses from 20X0 6,138

19 Other payments / disbursements made by Victoria during 20X9:

- Swimming lessons for victoria and her children cost $1,900 1,900
- Rent while her home under renovation cost $1,800 1,800
.- Advanced Accounting class to improve here IFRS knowledge (work related not required by

Required:
Please assist Victoria in her request; by calculating:

- RRSP Maximum deductible for 20X9 (as she will contribute this amount to her RRSP)
- 20X9 Division B income (Net Income for Tax Purposes) -(Must show income by Sub divisi
- 20X9 Taxable Income
- 20X9 Federal Tax Payable (before credits)
- Federal non-refundable Tax credits
- 20X9 Net Federal Tax payable
- Write a memo to Victoria explaining to her how you prepared her tax return. By explaining to
and why there is addition to income of amounts she never received (Benefits). (

Notes:
1- Answers only NOT acceptable, support calculations is required. Your solution MUST be on Ex
2- Use the current year rates for the 20X9, credits…etc. It can be found on your ITA, Meskanas or sea
3- Reference your answers to income tax act sections, subsection, paragraph…. etc.
10% of the marks will be allocated to references from ITA.
 1610228

toria, new client ask you to help her to understand and prepare her tax return for 20X9
reduce her taxes. Also, she want you to calculate and explain what is her minimum Net income for
Payables. Finally, she needs to know her tax credits and how much her tax refund or owe from (to) Canada Revenue Agency.

or delete any line below this Red Ribbon

p. and her 20X8 Net Income for Tax Purposes amounts of 59,480
RPP, interest income 1,150 non-eligible dividends 1,239
and her Pension Adjustment for 20X8 was 2,928

from reddeer branch and the remaining from Edmonton branch

900 to her disability plan

($1,800 a year), (at Dec 31, 20X8, her accumulated premiums in the plan were 700

ity plan, while she is in hospital

including taxes, the car was available to her for the entire year except for the month of march,
ve the keys for the car).
51,000 km for employment

Alberta co. shares at 25 on that date the company stock price was traded at
On October 10, 20X9 she sold those shares for 50 each and she pays

er children, in 20X1 she won 600,000 from a lottery ticket

in downtown Edmonton; and the second one for 190,000 in Reddeer
ile she is attending University. In 20X3 her accountant advise her to designate the house in Edmonton as the principal residence
In April 20X9 she sold the second house in Red deer for 220,000 and she moves to Edmonton,
Edmonton house as the principal residence from 20X3 and after.
ransferred to Edmonton branch, which located only 2km from here Edmonton home.
and, and she pays the moving company 6,500
very due to drivers’ strike, she and her family stayed in Holiday Inn hotel for 3 nights
u with the receipts). Alberta co. policy not to reimburse any moving expenses for any employee.

earning interest o 8% and she will receive the interest at maturity on Sep 30, 20X12.

xable Canadian corp.

257,636 she receives 34,000 in rental revenues and incurred expenses (other than CCA)
the max CCA) max CCA if possible

down payment and the remaining balance will be paid in 5 annual instalments. The cost for the land was

per share and she pays 1,000 commission for CIBC Investor Edge, to handle this transaction
m her late father in 20X5. Her father had paid 7 per share when he purchased the shares in 20X2,
r share. Also, In 20X6 Victoria purchased an additional 1,500 shares for 14

d, Moon 9 years old and Star 19 years old, all of the children are in good health
nd marriage and his employment income 24,000 Also, she told you based on court order she have to pay her previous sp
s you with documentation confirmed her payments of 12,000 during 20X9 and she plan to pay the remaining amount in

12,480 baby sitter to care of Sun and moon after school while she and Tom at work.
s which cost 4,000 per child ($1,000 a week)

ticket because he was driving under the influence of alcohol. Also, the provincial court sent him to jail for
deduct it if possible

None of that for Star

ring 20X9 full time and her tuition fees of 8,200

des you with form signed by Star agreeing to transfer any tuition credits at maximum to her Mom.

ans to deduct them if possible

e (work related not required by her employer) 840

 his amount to her RRSP)
ust show income by Sub division (3a, 3b…))

her tax return. By explaining to her why some items can’t be deducted,
ved (Benefits). (one to two pages maximum)

Your solution MUST be on Excel and use formulas as possible. Memo on Word Doc. Hand writing will NOT be accepted
on your ITA, Meskanas or search CRA website
raph…. etc.
m (to) Canada Revenue Agency.

h of march,

was traded at 30
1,000

dmonton as the principal residence,

moves to Edmonton,
 4 days

ep 30, 20X12.

nses (other than CCA) 29,000

e cost for the land was 101,279

, to handle this transaction

chased the shares in 20X2,
per share, and paid 200 commission

der she have to pay her previous spouse (spousal and child support)
plan to pay the remaining amount in Jan 20X10.

om at work.

ourt sent him to jail for 6 weeks

writing will NOT be accepted
 ITA Net Income for tax purposes (Section 3)

3 3(a) Employment income

Property Income -
Business Income -
Other income -
3(b) Taxable Capital Gain -
3(c ) other deductions -
3(d) Current year losses -
Net Income For Tax Purposes -

Division C deductions:
111 & 110 Non capital loss
Net capital loss
110(1)(d) & (d.1)deduction - -
Taxable Income -

2019 Federal Tax payable

15% on First (47,630) 7,145
20.5% on next TI - (TI-47,630) 9,764
26% on remaining (24,767)
Federal Tax Payable before credit (7,859)

Federal non-refundableTax credits ITA 118

118(1) (a) Basic personal amount

118(1) (a) Spouse or common-Law partner $ -
118.7 Canada Pension Plan contribution
118.7 Employment Insurance premiums
118(10) Canada Employment amount
118.5 Tuition,Education transferred from child
118.2 Medical expense
Actual expense
Less lessor of
3% of net income $ -
total credit base $ -
rate 15% -
118.1 Charitable donation
121(a) Dividend tax credit (non-eligible) -
Federal non-refundableTax credits -
Federal Income Tax deducted (6,038)
Net Federal Tax Payable ( Balance Owing) $ (13,897)
 1
1
1

5 $ -
1 $ -
5 $ -
5 $ -
5 $ -
1 $ -
$ -
$ -
$ -
2 $ -
$ -

1.5
1.5

1
31
 2019 Employment Income
ITA
5(1) Gross Salary 40,256
Add:
Add: Taxable Benefits:
Standby Charge (Car) 461
Operating Benefit 14,790
Stock Option Benefit 15,000
100

Deduct:

70,606

Propert Income
12(4) Interest Income

Net Propert income -

Other Income
0.5

0.5
0.5

1
1

0.5
0.5

1
0.5

11
ITA
3(b) Capital Gains (Losses)

Vacant Land

Identical properties River limited shares

Alberta Co shares (options)

Principle residence
Total Taxable Capital gain
 0.5
0.5
1

1
1

1
1

0.5
0.5
0.5

0.5
0.5
0.5

0.5
0.5
 2

- 12
 ITA
3( c ) Other deductions

56.1(4) Spusal support Paid

Child care expense

Moving Expense:

146 RRSP calculation

60(i)
Other deductions (to 3 ( c )
 1.00
1.00
-

1.00
0.50
0.50
- 1.00

0.50
0.50
0.50

1.00
-

0.50
0.50

0.50
 0.50
0.50
1.00
-

- 11.00