Carol Wong is the president and major shareholder of CW Ltd., a Canadian-controlled private corporation that operates

Question:

Carol Wong is the president and major shareholder of CW Ltd., a Canadian-controlled private that operates a construction business in Regina, Saskatchewan. CW earns only business income which is all subject to the small business deduction.
In 20X7, she had a number of financial transactions. She has asked you to help her prepare her 20X7 tax return and provide advice on other tax matters. The following additional financial information is provided:
1. Wong€™s 20X7 gross salary was $90,000, from which CW Ltd. deducted the following amounts:
Income tax €¦€¦€¦€¦€¦€¦€¦€¦€¦€¦€¦€¦€¦€¦€¦.$30,000
CPP and EI premiums€¦€¦€¦€¦€¦€¦€¦€¦€¦€¦€¦. 3,340
Private health insurance premiums€¦€¦€¦€¦€¦€¦. 600
Group sickness and accident insurance premiums€¦ 400
In addition to her salary, CW Ltd. paid $2,000 to a deferred profit-sharing plan, $600 of private health insurance premiums, and $400 of group sickness and accident insurance premiums on Wong€™s behalf.
2. Wong is required to use her own automobile for company business. For this, CW Ltd. pays her an annual allowance of $3,600. In 20X7, Wong incurred automobile operating costs of $5,200. Also, in 20X7, she purchased a new automobile for $34,000 plus HST, and received $18,000 as a trade on her old car. At the end of the previous year, the old car had an undepreciated capital cost allowance balance of $15,000 (class 10.1).Of the 20,000 kilometres driven in 20X7, 12,000 were for employment purposes.
3. For three months in 20X7, Wong was sick and could not attend work. She received $9,000 from the company€™s group sickness and accident insurance plan. Since the plan€™s inception, Wong had paid premiums totalling $2,000.
4. During 20X7, Wong purchased a warehouse property and leased it to CW Ltd. to store construction equipment. The property cost $250,000 (land 30,000, building 220,000). The building was constructed after March 18, 2007. The price for the land includes $2,000 of permanent landscaping completed just after acquisition. The 20X7 rental income is summarized below.

5. Wong is a 30% partner in a computer software business but is not active in its management. The partnership financial statement shows a profit of $40,000 for the year ended December 31, 20X7. The profit consists of $32,000 from software sales and $8,000 from interest earned.
6. On July 1, 20X6, Wong purchased a three-year guaranteed investment certificate for $20,000 with interest at 10%.The interest compounds annually but is not payable until July 1, 20X9.
7. Wong received (made) the following additional receipts (disbursements) in 20X7:
Receipts:
Dividends (Eligible) from Canadian public corporations€¦€¦€¦.$2,000
Dividends (Non-eligible) from CW Ltd. €¦€¦€¦. 3,000
Dividends from foreign corporations (net of 10% foreign tax) €¦€¦€¦. 900
Winnings from a provincial lottery€¦€¦€¦.€¦€¦€¦.12,000
Disbursements:
Contribution to RRSP (within allowable limits) €¦€¦€¦.10,000
Dental expenses for children €¦€¦€¦.€¦€¦€¦. 3,500
Donation to a charity€¦€¦€¦.€¦€¦€¦. 2,000
Safety deposit box €¦€¦€¦.€¦€¦€¦. 100
Life insurance premium used as collateral for personal bank loan€¦. 800
Investment counsel fees €¦€¦€¦.€¦€¦€¦.€¦ 1,000
Required:
Determine Wong€™s minimum net income for tax purposes in accordance with the aggregating formula of section 3 of the Income Tax Act.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...