2021 CANADIAN TAX

1. Perry is employed as a salesperson and is remunerated by commissions. He must pay all of his own expenses. During the year, he earned commissions of $37,000. His expenses were as follows: Automobile (operating costs) Entertainment (meals) Convention (related to his employment) Donations Cell phone basic plan (related to his employment) $4,000 1,300 500 200 1,300 The personal-use portion of his automobile expense is 20%. The UCC of his automobile at the end of the previous year was $6,700. 2. He made the following capital transactions: Shares of public corporation A Shares of public corporation B Shares of Canadian-controlled private corporation (a small business corporation) Gain (loss) $ 13,300 (24,000) (8,000) 3. In 2020, Perry acquired the following two residential rental properties. Land Building Property X $13,300 93,200 Property Y $15,000 60,000 Maximum capital cost allowance was claimed in 2020. In 2021, the city expropriated property Y for $82,700 (land - $22,700, building - $60,000). Perry was pleased because property Y was vacant for part of the year after a tenant vacated unexpectedly. In 2021, net rental income from both properties (after all expenses but before capital cost allowance) was $1,000. 4. Perry's other income and expenses are as follows: $2,600 1,700 Income: Taxable dividends-Canadian public corporations Interest on foreign bonds (net of 15% withholding tax) Expenses: Interest on a loan used to acquire the foreign bonds Investment counsel fee 1,700 1,100 5. During the year, Perry made a contribution of 1,000 to a registered pension plan, which was matched by his employer. In addition, he contributed $2,600 to his RRSP. Required: Calculate Perry's minimum 2021 net income in accordance with the aggregating formula for determining net income for tax purposes. $ 37,000 A Employment Income: Automobile Operating expenses Commission Income Contribution to RPP Entertainment Expense Telephone Expense Automobile CCA Net Employment Income Rental Income: Net rents before CCA Property X CCA Recapture of CCA Net rental income Other Property Income: Dividends $ $ 37,000 $ 0 Foreign interest Interest expense Investment counsel fees $ 0 Net Property Income B Capital Gains: Taxable capital gains - Corp A Taxable capital gains - Property Y Allowable capital losses - Corp B Net taxable capital gains C Other Deductions RRSP deduction CPP enhanced contributions D Allowable Business Investment Loss (ABIL) Net income for Tax purposes $ 0 $ $ 37,000 1. Perry is employed as a salesperson and is remunerated by commissions. He must pay all of his own expenses. During the year, he earned commissions of $37,000. His expenses were as follows: Automobile (operating costs) Entertainment (meals) Convention (related to his employment) Donations Cell phone basic plan (related to his employment) $4,000 1,300 500 200 1,300 The personal-use portion of his automobile expense is 20%. The UCC of his automobile at the end of the previous year was $6,700. 2. He made the following capital transactions: Shares of public corporation A Shares of public corporation B Shares of Canadian-controlled private corporation (a small business corporation) Gain (loss) $ 13,300 (24,000) (8,000) 3. In 2020, Perry acquired the following two residential rental properties. Land Building Property X $13,300 93,200 Property Y $15,000 60,000 Maximum capital cost allowance was claimed in 2020. In 2021, the city expropriated property Y for $82,700 (land - $22,700, building - $60,000). Perry was pleased because property Y was vacant for part of the year after a tenant vacated unexpectedly. In 2021, net rental income from both properties (after all expenses but before capital cost allowance) was $1,000. 4. Perry's other income and expenses are as follows: $2,600 1,700 Income: Taxable dividends-Canadian public corporations Interest on foreign bonds (net of 15% withholding tax) Expenses: Interest on a loan used to acquire the foreign bonds Investment counsel fee 1,700 1,100 5. During the year, Perry made a contribution of 1,000 to a registered pension plan, which was matched by his employer. In addition, he contributed $2,600 to his RRSP. Required: Calculate Perry's minimum 2021 net income in accordance with the aggregating formula for determining net income for tax purposes. $ 37,000 A Employment Income: Automobile Operating expenses Commission Income Contribution to RPP Entertainment Expense Telephone Expense Automobile CCA Net Employment Income Rental Income: Net rents before CCA Property X CCA Recapture of CCA Net rental income Other Property Income: Dividends $ $ 37,000 $ 0 Foreign interest Interest expense Investment counsel fees $ 0 Net Property Income B Capital Gains: Taxable capital gains - Corp A Taxable capital gains - Property Y Allowable capital losses - Corp B Net taxable capital gains C Other Deductions RRSP deduction CPP enhanced contributions D Allowable Business Investment Loss (ABIL) Net income for Tax purposes $ 0 $ $ 37,000