BAF103 - INCOME TAX PLANNING ASSIGNMENT BEGINS:
Meet Jane and John Anderson
Jane and John Anderson come to you asking for basic tax advice to go along with their financial plan recommendations. Their specific information is found on the associated excel document.
Specifically, given the information on that excel document and using the forms provided on Blackboard, complete the tax forms for either John or Jane. Calculate and show their tax payable or refundable.
I do not expect the first assignment to be done perfectly; however, I do expect students to put in time and effort to make a reasonable attempt based on what we have studied in the first three weeks of the course. This will also help me assess your ability to read and follow the instructions on the tax returns provided and will inform how I teach the following weeks of the course.
I am under no illusion that students are highly motivated to collaborate with one another on this assignment. My recommendation though would be to work on this yourself individually because you need to practice for tests and examinations. Reliance on others might help to some extent but you need to learn this material yourself. You will not have access to others and/or support materials during tests and examinations and, more importantly, you will not have access to others when you are preparing tax returns for clients in the future should you decide to pursue a CFP designation.
This assignment prepares you for the first test so it is vital you learn how to complete the tax return on your own. Students who do not take the assignments seriously end up performing poorly on the tests and in the course overall.
| Financial information for john and jane anderson | | | | |
| For tax year | 2022 | | | |
| Married couple | | | | |
| Address | | 1355 | Nowhere Street | |
| PO Box | | 1355 | | |
| RR | | 7 | | |
| Town | | Nowhere | | |
| Province | | Ontario | | |
| Postal Code | K0K 9K0 | | | |
| | | | | |
| Correspondence | English | | | |
| Social insurance number | | | | |
| | john | 455 555 555 | | |
| | jane | 655 555 556 | | |
| | | | | |
| John is employed, Jane is self employed | | | | |
| | | John | | Jane | | |
| Employment income | $ 105,000.00 | | $ 30,000.00 | | | |
| Business income | | | $ 70,000.00 | | | |
| Business expenses | | | $ 32,000.00 | | | |
| Interest income | $ 4,000.00 | | $ 4,200.00 | | | |
| RRSP contributions | $ 7,000.00 | | $ 6,000.00 | | | |
| TFSA contributions | $ 3,500.00 | | $ 5,000.00 | | | |
| CPP contributions | ? | | ? | | | |
| EI contributions | ? | | ? | | | |
| Tuition fees | | | $ 4,500.00 | | | |
| Interest paid on RRSP loan | | | $ 400.00 | | | |
| Professional dues, fees | $ 700.00 | | $ 500.00 | | | |
| Total taxes paid (instalments) | $ 28,350.00 | | $ 8,100.00 | | | |
| | | | | | | |
| Hint for Jane: EI and CPP premiums - would only be paid on employment income PRETEND she does not pay on business income for now | | | | | | |
BASED ON THE INFORMATION ABOVE (AFTER ANSWERING QUESTION MARKS IN TABLE ABOVE), FILL OUT THE FORM BELOW Form ON428
T1 2022 FORM
Part A - Ontario tax on taxable income Enter your taxable income from line 26000 of your return. Use the amount from line 1 to complete the appropriate column belov Protected B when completed Step 1 - Identification and other information (continued) Please answer the following questions. Indian Act - Exempt income Tick this box if you have any income that is exempt under the Indian Act. For more information on this type of income, go to canada.ca/taxes-aboriginal-peoples. 1 If you tick the box, complete Form T90, Income Exempt From Tax Under the Indian Act. Complete this form so that the CRA can calculate your Canada training credit limit for the 2021 tax year. The information you provide may also be used to calculate your Canada workers benefit for the 2020 tax year, if applicable. It also may be used to calculate your family's provincial or territorial benefits. Foreign property Did you own or hold specified foreign property where the total cost amount of all such property, at any time in 2020 , was more than CAN\$100,000? 26600 Yes 1 No 12 If yes, complete Form T1135, Foreign Income Verification Statement. There are substantial penalties for not completing and filing Form T1135 by the due date. For more information, see Form T1135. Part C - Ontario tax (continued) Protected B when completed Amount from line 61 of the previous page Ontario surtax: Amount from line 62 above Ontario tax on split income from line 52 Line 63 minus line 64 (if negative, enter "0") 62 63 64 65 Complete lines 66 to 68 if the amount on line 65 is more than $4,874. (Line65 $4,874)20% (if negative, enter "0") = Line 66 plus line 67 $6,237)36% (if negative, enter "0") = Line 62 plus line 68 Ontario dividend tax credit from line 57 Line 69 minus line 70 (if negative, enter "0") Ontario additional tax for minimum tax purposes: If you entered an amount on line 98 of Form T691, use Worksheet ON428 to calculate your additional tax for minimum tax purposes. Line 71 plus line 72 66 67 Ontario tax reduction Enter "0" on line 80 if any of the following applies to you: - You were not a resident of Canada at the beginning of the year - You were not a resident of Ontario on December 31, 2021 - There is an amount on line 72 - The amount on line 73 is " 0 " - Your return is filed for you by a trustee in bankruptcy - You are not claiming an Ontario tax reduction If none of the above applies to you, complete lines 74 to 80 to calculate your Ontario tax reduction. Protected B when completed Step 3 - Net income Enter your total income from line 28 on the previous page. 15000 120,00000 29 Pension adjustment (box 52 of all T4 slips and box 034 of all T4A slips) 20600 Registered pension plan deduction (box 20 of all T4 slips and box 032 of all T4A slips) 20700 30 RRSP deduction (see Schedule 7 and attach receipts) 20800+ 31 Pooled registered pension plan (PRPP) employer contributions (amount from your PRPP contribution receipts) 20810 Deduction for elected split-pension amount (complete Form T1032) Annual union, professional, or like dues (receipts and box 44 of all T4 slips) Universal child care benefit repayment (box 12 of all RC62 slips) Child care expenses (complete Form T778) Disability supports deduction (complete Form T929) Business investment loss (see Guide T4037) Gross 21699 Allowable deduction 21700+ Moving expenses (complete Form T1-M) Support payments made (see Guide P102) Total 21999 Allowable deduction 22000+ 32 Carrying charges and interest expenses (complete the Worksheet for the return) \begin{tabular}{|c|c|c|} \hline 21000+ & & 3 \\ \hline 21200+ & & \\ \hline 21300+ & & \\ \hline 21400+ & & \\ \hline 21500+ & & \\ \hline n 21700+ & & \\ \hline 21900+ & & 3 \\ \hlinen22000+ & & \\ \hline 22100+ & & 4 \\ \hline 22200+ & & -4 \\ \hline ) 22215+ & 16560 & 4 \\ \hline 22400+ & & 4 \\ \hline 22900+ & & \\ \hline 23100+ & & \\ \hline 23200+ & & 4 \\ \hline 23300= & 16560 & \\ \hline \end{tabular} This is your net income before adjustments. 23400 (maximum \$165.60) 22215+ Form RC381, whichever applies) Exploration and development expenses (go to canada.ca/line-22400) (complete Form T1229) Other employment expenses (see Guide T4044) Clergy residence deduction (complete Form T1223) Other deductions Specify: Add lines 30 to 46. Line 29 minus line 47 (if negative, enter "0") Social benefits repayment (If you reported income at line 8 and the amount at line 48 is more than $67,750, see the repayment chart on the back of your T4E slip. If you reported income on lines 3 or 26 , and the amount at line 48 is more than $79,054, or you have an amount at code 202 of your T4A slip, and the amount at line 48 is more than $38,000, complete the chart for line 23500 on the Worksheet for the return. Otherwise, enter "0") Line 48 minus line 49 (if negative, enter "0") This is your net income. 23600=119,83440 47 \begin{tabular}{ll|l} 119,834 & 40 & 48 \end{tabular} \begin{tabular}{r|rr} 165 & 60 & 47 \\ \cline { 1 - 2 } & 48,834 & 40 \end{tabular} 23500 49 50 5006-R E (20) Page 4 of 8 Protected B when completed Part B - Federal non-refundable tax credits (continued) Enter the subtotal amount from line 78 on the previous page. Base CPP or QPP contributions: through employment income (complete Schedule 8 or Form RC381, whichever applies) on self-employment and other earnings (complete Schedule 8 or Form RC381, whichever applies) Employment insurance premiums: through employment from box 18 and box 55 of all T4 slips on self-employment and other eligible earnings (complete Schedule 13) Volunteer firefighters' amount (go to canada.ca/lines-31220-31240) Search and rescue volunteers' amount(go to canada.ca/lines-31220-31240) Canada employment amount(enter $1,245 or the total of your employment income you reported on lines 1 and 2, whichever is less) Home buyers' amount(go to canada.ca/line-31270) Home accessibility expenses (go to canada.ca/line-31285) (complete the Worksheet for the return) Adoption expenses (go to canada.ca/line-31300) Digital news subscription expenses Pension income amount (complete the Worksheet for the return) Disability amount (for self) (claim $8,576 or if you were under 18 years of age, complete the Worksheet for the return) Disability amount transferred from a dependant (complete the Worksheet for the return) Interest paid on your student loans (see Guide P105) Your tuition, education, and textbook amounts (complete Schedule 11) Tuition amount transferred from a child Amounts transferred from your spouse or common-law partner (complete Schedule 2) Medical expenses for self, spouse or common-law partner, and your dependent children born in 2003 or later Enter $2,397 or 3% of line 50 , whichever is less. Line 98 minus line 99 (if negative, enter "0") Allowable amount of medical expenses for other dependants (complete the Worksheet for the return) Add lines 100 and 101. Add lines 79 to 97 , and line 102. Federal non-refundable tax credit rate Multiply line 103 by line 104 . Donations and gifts (complete Schedule 9) Add lines 105 and 106. Enter this amount on line 111 on the next page. 13,22900 79 \begin{tabular}{|c|c|c|} \hline 30800+ & 2,732 & 40 \\ \hline 31000+ & & \\ \hline 31200+ & 856 & 36 \\ \hline 31217+ & & \\ \hline 31220+ & & \\ \hline 31240+ & & \\ \hline 31260+ & 1,245 & 00 \\ \hline 31270+ & & \\ \hline 31285+ & & \\ \hline 31300+ & & \\ \hline 31350+ & & \\ \hline 31400+ & & \\ \hline 31600+ & & \\ \hline 31800+ & & \\ \hline 31900+ & & \\ \hline 32300+ & & \\ \hline 32400+ & & \\ \hline 32600+ & & \\ \hline \end{tabular} 98 99 100 33199+101 33200= = 90 91 92 93 95 96 97 102 103 104 105 Total federal non-refundable tax credits 107 107 5006-R E (20) Page 6 of 8 5006-R E (20) Page 3 of 8 Protected B when completed Step 7 - Refund or balance owing (continued) i3 LIne 133 minus IIne 14y I his is your retund or balance owing. 19 If the result is negative, you have a refund. If the result is positive, you have a balance owing. Enter the amount below on whichever line applies. Generally, we do not charge or refund a difference of $2 or less. Refund 48400 Balance owing 48500 7,77118 For more information on how to enrol for direct deposit, go to canada.ca/cra-direct-deposit. For more information on how to make your payment, go to canada.ca/payments. Your balance owing is due no later than April 30, 2021. Personal information (including the SIN) is collected for the purposes of the administration or enforcement of the Income Tax Act and related programs and activities including administering tax, benefits, audit, compliance, and collection. The information collected may be used or disclosed for purposes of other federal acts that provide for the imposition and collection of a tax or duty. It may also be disclosed to other federal, provincial, territorial, or foreign government institutions to the extent authorized by law. Failure to provide this information may result in interest payable, penalties, or other actions. Under the Privacy Act, individuals have a right of protection, access to and correction of their personal information, or to file a complaint with the Privacy Commissioner of Canada regarding the handling of their personal information. Refer to Personal Information Bank CRA PPU 005 on Info Source at canada.ca/cra-info-source. Part A - Ontario tax on taxable income Enter your taxable income from line 26000 of your return. Use the amount from line 1 to complete the appropriate column belov Protected B when completed Step 1 - Identification and other information (continued) Please answer the following questions. Indian Act - Exempt income Tick this box if you have any income that is exempt under the Indian Act. For more information on this type of income, go to canada.ca/taxes-aboriginal-peoples. 1 If you tick the box, complete Form T90, Income Exempt From Tax Under the Indian Act. Complete this form so that the CRA can calculate your Canada training credit limit for the 2021 tax year. The information you provide may also be used to calculate your Canada workers benefit for the 2020 tax year, if applicable. It also may be used to calculate your family's provincial or territorial benefits. Foreign property Did you own or hold specified foreign property where the total cost amount of all such property, at any time in 2020 , was more than CAN\$100,000? 26600 Yes 1 No 12 If yes, complete Form T1135, Foreign Income Verification Statement. There are substantial penalties for not completing and filing Form T1135 by the due date. For more information, see Form T1135. Part C - Ontario tax (continued) Protected B when completed Amount from line 61 of the previous page Ontario surtax: Amount from line 62 above Ontario tax on split income from line 52 Line 63 minus line 64 (if negative, enter "0") 62 63 64 65 Complete lines 66 to 68 if the amount on line 65 is more than $4,874. (Line65 $4,874)20% (if negative, enter "0") = Line 66 plus line 67 $6,237)36% (if negative, enter "0") = Line 62 plus line 68 Ontario dividend tax credit from line 57 Line 69 minus line 70 (if negative, enter "0") Ontario additional tax for minimum tax purposes: If you entered an amount on line 98 of Form T691, use Worksheet ON428 to calculate your additional tax for minimum tax purposes. Line 71 plus line 72 66 67 Ontario tax reduction Enter "0" on line 80 if any of the following applies to you: - You were not a resident of Canada at the beginning of the year - You were not a resident of Ontario on December 31, 2021 - There is an amount on line 72 - The amount on line 73 is " 0 " - Your return is filed for you by a trustee in bankruptcy - You are not claiming an Ontario tax reduction If none of the above applies to you, complete lines 74 to 80 to calculate your Ontario tax reduction. Protected B when completed Step 3 - Net income Enter your total income from line 28 on the previous page. 15000 120,00000 29 Pension adjustment (box 52 of all T4 slips and box 034 of all T4A slips) 20600 Registered pension plan deduction (box 20 of all T4 slips and box 032 of all T4A slips) 20700 30 RRSP deduction (see Schedule 7 and attach receipts) 20800+ 31 Pooled registered pension plan (PRPP) employer contributions (amount from your PRPP contribution receipts) 20810 Deduction for elected split-pension amount (complete Form T1032) Annual union, professional, or like dues (receipts and box 44 of all T4 slips) Universal child care benefit repayment (box 12 of all RC62 slips) Child care expenses (complete Form T778) Disability supports deduction (complete Form T929) Business investment loss (see Guide T4037) Gross 21699 Allowable deduction 21700+ Moving expenses (complete Form T1-M) Support payments made (see Guide P102) Total 21999 Allowable deduction 22000+ 32 Carrying charges and interest expenses (complete the Worksheet for the return) \begin{tabular}{|c|c|c|} \hline 21000+ & & 3 \\ \hline 21200+ & & \\ \hline 21300+ & & \\ \hline 21400+ & & \\ \hline 21500+ & & \\ \hline n 21700+ & & \\ \hline 21900+ & & 3 \\ \hlinen22000+ & & \\ \hline 22100+ & & 4 \\ \hline 22200+ & & -4 \\ \hline ) 22215+ & 16560 & 4 \\ \hline 22400+ & & 4 \\ \hline 22900+ & & \\ \hline 23100+ & & \\ \hline 23200+ & & 4 \\ \hline 23300= & 16560 & \\ \hline \end{tabular} This is your net income before adjustments. 23400 (maximum \$165.60) 22215+ Form RC381, whichever applies) Exploration and development expenses (go to canada.ca/line-22400) (complete Form T1229) Other employment expenses (see Guide T4044) Clergy residence deduction (complete Form T1223) Other deductions Specify: Add lines 30 to 46. Line 29 minus line 47 (if negative, enter "0") Social benefits repayment (If you reported income at line 8 and the amount at line 48 is more than $67,750, see the repayment chart on the back of your T4E slip. If you reported income on lines 3 or 26 , and the amount at line 48 is more than $79,054, or you have an amount at code 202 of your T4A slip, and the amount at line 48 is more than $38,000, complete the chart for line 23500 on the Worksheet for the return. Otherwise, enter "0") Line 48 minus line 49 (if negative, enter "0") This is your net income. 23600=119,83440 47 \begin{tabular}{ll|l} 119,834 & 40 & 48 \end{tabular} \begin{tabular}{r|rr} 165 & 60 & 47 \\ \cline { 1 - 2 } & 48,834 & 40 \end{tabular} 23500 49 50 5006-R E (20) Page 4 of 8 Protected B when completed Part B - Federal non-refundable tax credits (continued) Enter the subtotal amount from line 78 on the previous page. Base CPP or QPP contributions: through employment income (complete Schedule 8 or Form RC381, whichever applies) on self-employment and other earnings (complete Schedule 8 or Form RC381, whichever applies) Employment insurance premiums: through employment from box 18 and box 55 of all T4 slips on self-employment and other eligible earnings (complete Schedule 13) Volunteer firefighters' amount (go to canada.ca/lines-31220-31240) Search and rescue volunteers' amount(go to canada.ca/lines-31220-31240) Canada employment amount(enter $1,245 or the total of your employment income you reported on lines 1 and 2, whichever is less) Home buyers' amount(go to canada.ca/line-31270) Home accessibility expenses (go to canada.ca/line-31285) (complete the Worksheet for the return) Adoption expenses (go to canada.ca/line-31300) Digital news subscription expenses Pension income amount (complete the Worksheet for the return) Disability amount (for self) (claim $8,576 or if you were under 18 years of age, complete the Worksheet for the return) Disability amount transferred from a dependant (complete the Worksheet for the return) Interest paid on your student loans (see Guide P105) Your tuition, education, and textbook amounts (complete Schedule 11) Tuition amount transferred from a child Amounts transferred from your spouse or common-law partner (complete Schedule 2) Medical expenses for self, spouse or common-law partner, and your dependent children born in 2003 or later Enter $2,397 or 3% of line 50 , whichever is less. Line 98 minus line 99 (if negative, enter "0") Allowable amount of medical expenses for other dependants (complete the Worksheet for the return) Add lines 100 and 101. Add lines 79 to 97 , and line 102. Federal non-refundable tax credit rate Multiply line 103 by line 104 . Donations and gifts (complete Schedule 9) Add lines 105 and 106. Enter this amount on line 111 on the next page. 13,22900 79 \begin{tabular}{|c|c|c|} \hline 30800+ & 2,732 & 40 \\ \hline 31000+ & & \\ \hline 31200+ & 856 & 36 \\ \hline 31217+ & & \\ \hline 31220+ & & \\ \hline 31240+ & & \\ \hline 31260+ & 1,245 & 00 \\ \hline 31270+ & & \\ \hline 31285+ & & \\ \hline 31300+ & & \\ \hline 31350+ & & \\ \hline 31400+ & & \\ \hline 31600+ & & \\ \hline 31800+ & & \\ \hline 31900+ & & \\ \hline 32300+ & & \\ \hline 32400+ & & \\ \hline 32600+ & & \\ \hline \end{tabular} 98 99 100 33199+101 33200= = 90 91 92 93 95 96 97 102 103 104 105 Total federal non-refundable tax credits 107 107 5006-R E (20) Page 6 of 8 5006-R E (20) Page 3 of 8 Protected B when completed Step 7 - Refund or balance owing (continued) i3 LIne 133 minus IIne 14y I his is your retund or balance owing. 19 If the result is negative, you have a refund. If the result is positive, you have a balance owing. Enter the amount below on whichever line applies. Generally, we do not charge or refund a difference of $2 or less. Refund 48400 Balance owing 48500 7,77118 For more information on how to enrol for direct deposit, go to canada.ca/cra-direct-deposit. For more information on how to make your payment, go to canada.ca/payments. Your balance owing is due no later than April 30, 2021. Personal information (including the SIN) is collected for the purposes of the administration or enforcement of the Income Tax Act and related programs and activities including administering tax, benefits, audit, compliance, and collection. The information collected may be used or disclosed for purposes of other federal acts that provide for the imposition and collection of a tax or duty. It may also be disclosed to other federal, provincial, territorial, or foreign government institutions to the extent authorized by law. Failure to provide this information may result in interest payable, penalties, or other actions. Under the Privacy Act, individuals have a right of protection, access to and correction of their personal information, or to file a complaint with the Privacy Commissioner of Canada regarding the handling of their personal information. Refer to Personal Information Bank CRA PPU 005 on Info Source at canada.ca/cra-info-source
