BTAX Case Study W$24$

Required: Prepare the $2023$ personal tax return for Michael Scott using CANTAX

software. Use Annotations & Breakdowns to explain entries, calculations, and document

assumptions as necessary. Prepare a one page analysis of the tax considerations

Michael is facing in his $2023$ return both positively and negatively impacting his return.

Bonus point: What other things could Michael & Holly have possibly done to improve

this tax return?

Background: Michael Scott is a District Manager for Staples residing in Ontario. He

has moved from Quebec during the past year to get married and join his wife, Holly. He

has provided you with attached tax slips & receipts, with other relevant information

summarized as follows:

Address: $18$ Smith Street, Kingston, ON K$6$J$2$Y$7$

Date of Birth: Oct. $31,1982$

SIN: $123-456-789$

Michael and Holly were married September $1,2023$ and have no eligible dependents.

Holly has owned the home in Kingston since $2018.$ She is a human resource manager

for Home Depot in Kingston. Her other relevant information summarized as follows:

Maiden name: Flax

Date of Birth is Apr. $1,1986$

SIN: $987-654-321$

Michael accepted an offer for his small office supply store in Quebec $($which he owned

free and clear$)$ for $$150,000$ May $15,2023.$ His initial investment in $2013$ was $$25,000.$

The business does note own real estate. Michael has already determined that the sale

of shares qualify for the lifetime capital gains exemption. Michael has never utilized his

LCGE.

Michael sold his Condo in Quebec during $2023$ prior to his relocation, which was the

only home he ordinarily resided in$.$ He purchased the home in $2010$ for $345,000,$ and

sold it for $$600,000.$ Selling costs included $$15,000$ in real estate commissions and

$$3000$ in legal costs.

Michael provided the following information relating to his relocation:

$$ Distance from old home to new work $350$ km

$$ Distance from new home to new work $10$ km

$$ Moving Date: June $15,2023$

$$ New Job Start Date: July $5,2023$

$$ Distance driven by personal vehicle $340$ km

$$ Movers Expenses: $$3000$

Eligible medical expenses for the year paid personally totalled $$8,000.$

As part of his new employment contract, Michael was required to use his personal

vehicle as well as his personal cell phone. He received a T$2200$ from Staples Canada to

this effect. His monthly cell phone bill was $$100$ and he used his cell phone $50\%$ for

work purposes. Michael leased a vehicle at the beginning of August at a cost of $$550$

plus HST per month. Of the $10,000$ km driven during the year, $5,000$ were related to

work. He incurred additional vehicle operating costs in the amount of $$1500.$

Michael placed the proceeds of the sale of his business and the sale of his condo,

totaling $$290,000$ in a combination of investments including a new TFSA using $$30,000,$

a contribution to an existing RRSP Oct. $1,2023$ for $10,000,$ and another $$5,000$ Jan $15,$

$2024,$ and the balance of $$245,000$ in an un$-$registered mixed portfolio of mutual funds

that paid a total of $$9,431$ of dividends. Total fees to manage his investments totaled

$$2250.$

Supporting Documents Attached.

Sole Proprietor business breakdown before:

Sales: $$145,000$

Rent Expenses: $12,000.$

Insurance Expenses $1,200$

Inventory Purchases $20,000$

Miscellaneous Expenses: $15,000$

Michael Annual Salary Drawn: $$175,000($partial year T$4$ attached: $65,038\mathrm{.}31$