BUS 330: Income Taxation for Individuals, Summer 2021 Comprehensive Case Analysis (15% of course assessment) Submission Deadline: August 2 (Monday) at 5:00 pm Brian Cedar is a sales manager employed by a Canadian public company with a December 31 year end. His base salary for 2020 is $95,000. He also earned $23,750 in commissions and was awarded a bonus of $18,000 for his outstanding sales performance during the year. The bonus will not be paid until the end of July, 2021. The employer's year end is December 31. His employer withheld the following amounts from his base salary: Registered Pension Plan Contributions (RPP) Employment Insurance Premiums (EI) Canada Pension Plan Contribution (CPP) Union Dues Cash Donations to Blue Cross Disability Insurance Premiums $4,750 856 2,898 500 2,200 1,600 Brian's employer makes matching contributions to his RPP and his disability insurance policy. The disability insurance benefits will be paid on a periodic basis and intended to compensate the individual for loss of employment income. His employer provides him with an allowance of $1,000 a month in order to cover his travel costs, including the use of his personally owned automobile. The automobile was purchased for $29,600 in March 2019 and, during that year, was used 50% for employment related activities. In 2020, his employment related use of the vehicle increased to 60% and he incurred automobile operating expenses of $7,560. His employer requires him to maintain an office in his personal residence and has provided him with a signed Form T2200. Brian uses 40% of his personal residence as an office. During 2020, the costs associated with his home were as follows: Insurance Interest payments on mortgage Property taxes Utilities Wiring and repairs Total 1,500 $6,920 4,800 3,380 5,400 $22,000 At the beginning of 2020, Brian's employer granted him options to buy 2,500 of the company's common shares at a price of $15 per share. At that time, the shares were trading at $12 per share. During June 2020, when the price per share had increased to $18 per share, Brian exercised all of these options. In order to buy new furniture and appliances for his residence, he sold 1,800 of these shares for $20 per share in September 2020. Page 1 His employer has a policy of giving all employees gifts to promote employee loyalty and help local businesses. During 2020, Brian received the following gifts: A $300 gift certificate at London Drugs A scarf with employer logo. The value of this gift was $20 A holiday season gift basket with salmon, nuts and wine. The value of this gift was $250. A weekend for him and his wife at a hotel in Whistler. The value of this gift was $460. Family Information Brian is 48 years old and lives with his common-law partner Bianca. Both of them have a child from a previous marriage. Brian's child Cindy is 15 years old and is sufficiently disabled that she qualifies for the disability tax credit. Cindy has no income of her own. Bianca's child Chris is 9 years old and has no income of his own. Bianca is 46 years old and attends university on a full-time basis. Her tuition fees are $7,200 for the year 2020. Bianca has agreed to transfer any unused tuition credit to Brian. During 2020, Bianca receives child support payments of $500 per month from her ex-husband. She has a net income of $8,000 from her grocery business for the year 2020. Other Information 1. On April 15, 2020, Brian bought 3,000 shares of Goody Inc. The shares have an adjusted cost base of $28 per share. On May 6, 2020, he sold all of these shares at $23.8 per share. On May 23, 2020, he acquired 2,250 shares of Goody Inc. at a cost of $20.5 per share and was still holding the shares at the end of the year. 2. During 2020, Brian had a stamp collection that he sold for $11,000. The cost of all of the stamps totalled $8,500. A personal use boat which Brian acquired five years ago for $34,000 was sold for $18,000. 3. Brian owned a small plot of land with an adjusted cost base of $230,000. The land was acquired by Brian eight years ago. During 2020, he sold the land at a price of $500,000. The purchaser provides a down payment of $25,000, with the balance payable in 10 annual instalments of $47,500 beginning in 2021. 4. During 2020, Brian receives non-eligible dividends of $6,500 and interest income from Canadian government bonds of $2,000. 5. In 2019, Brian's Net Income For Tax Purposes was $ 148,200. This was made up of net employment income of $120,000 (after the deduction of $5,400 in RPP contributions), interest income of $2,300, grossed up dividends of $3,800, a net rental loss of $9,000, royalties on a book written by his mother a year ago of $2,500 and net business income of $28,600. 6. At the end of 2019, Brian's Unused RRSP Deduction Room was $6,700 and he had no undeducted contributions. His employer reported that he had a 2019 Pension Adjustment of $10,800. Page 2 Required: (a) Calculate Brian's maximum deductible RRSP contribution for 2020. (b) Assume that Brian contributes the amount calculated in Part (a) above to his RRSP. Calculate Brian's 2020 minimum: Net Income For Tax Purposes Taxable income, and Federal Tax Payable. Ignore provincial income taxes, any instalments he may have paid during the year, any income tax withholdings that would be made by his employer, and GST/HST/PST considerations. Note: You have to type your answers in an Excel file, upload and submit your file on Canvas. You must provide detailed workings and explanations to the tax treatment of various items to facilitate the awarding of marks. BUS 330: Income Taxation for Individuals, Summer 2021 Comprehensive Case Analysis (15% of course assessment) Submission Deadline: August 2 (Monday) at 5:00 pm Brian Cedar is a sales manager employed by a Canadian public company with a December 31 year end. His base salary for 2020 is $95,000. He also earned $23,750 in commissions and was awarded a bonus of $18,000 for his outstanding sales performance during the year. The bonus will not be paid until the end of July, 2021. The employer's year end is December 31. His employer withheld the following amounts from his base salary: Registered Pension Plan Contributions (RPP) Employment Insurance Premiums (EI) Canada Pension Plan Contribution (CPP) Union Dues Cash Donations to Blue Cross Disability Insurance Premiums $4,750 856 2,898 500 2,200 1,600 Brian's employer makes matching contributions to his RPP and his disability insurance policy. The disability insurance benefits will be paid on a periodic basis and intended to compensate the individual for loss of employment income. His employer provides him with an allowance of $1,000 a month in order to cover his travel costs, including the use of his personally owned automobile. The automobile was purchased for $29,600 in March 2019 and, during that year, was used 50% for employment related activities. In 2020, his employment related use of the vehicle increased to 60% and he incurred automobile operating expenses of $7,560. His employer requires him to maintain an office in his personal residence and has provided him with a signed Form T2200. Brian uses 40% of his personal residence as an office. During 2020, the costs associated with his home were as follows: Insurance Interest payments on mortgage Property taxes Utilities Wiring and repairs Total 1,500 $6,920 4,800 3,380 5,400 $22,000 At the beginning of 2020, Brian's employer granted him options to buy 2,500 of the company's common shares at a price of $15 per share. At that time, the shares were trading at $12 per share. During June 2020, when the price per share had increased to $18 per share, Brian exercised all of these options. In order to buy new furniture and appliances for his residence, he sold 1,800 of these shares for $20 per share in September 2020. Page 1 His employer has a policy of giving all employees gifts to promote employee loyalty and help local businesses. During 2020, Brian received the following gifts: A $300 gift certificate at London Drugs A scarf with employer logo. The value of this gift was $20 A holiday season gift basket with salmon, nuts and wine. The value of this gift was $250. A weekend for him and his wife at a hotel in Whistler. The value of this gift was $460. Family Information Brian is 48 years old and lives with his common-law partner Bianca. Both of them have a child from a previous marriage. Brian's child Cindy is 15 years old and is sufficiently disabled that she qualifies for the disability tax credit. Cindy has no income of her own. Bianca's child Chris is 9 years old and has no income of his own. Bianca is 46 years old and attends university on a full-time basis. Her tuition fees are $7,200 for the year 2020. Bianca has agreed to transfer any unused tuition credit to Brian. During 2020, Bianca receives child support payments of $500 per month from her ex-husband. She has a net income of $8,000 from her grocery business for the year 2020. Other Information 1. On April 15, 2020, Brian bought 3,000 shares of Goody Inc. The shares have an adjusted cost base of $28 per share. On May 6, 2020, he sold all of these shares at $23.8 per share. On May 23, 2020, he acquired 2,250 shares of Goody Inc. at a cost of $20.5 per share and was still holding the shares at the end of the year. 2. During 2020, Brian had a stamp collection that he sold for $11,000. The cost of all of the stamps totalled $8,500. A personal use boat which Brian acquired five years ago for $34,000 was sold for $18,000. 3. Brian owned a small plot of land with an adjusted cost base of $230,000. The land was acquired by Brian eight years ago. During 2020, he sold the land at a price of $500,000. The purchaser provides a down payment of $25,000, with the balance payable in 10 annual instalments of $47,500 beginning in 2021. 4. During 2020, Brian receives non-eligible dividends of $6,500 and interest income from Canadian government bonds of $2,000. 5. In 2019, Brian's Net Income For Tax Purposes was $ 148,200. This was made up of net employment income of $120,000 (after the deduction of $5,400 in RPP contributions), interest income of $2,300, grossed up dividends of $3,800, a net rental loss of $9,000, royalties on a book written by his mother a year ago of $2,500 and net business income of $28,600. 6. At the end of 2019, Brian's Unused RRSP Deduction Room was $6,700 and he had no undeducted contributions. His employer reported that he had a 2019 Pension Adjustment of $10,800. Page 2 Required: (a) Calculate Brian's maximum deductible RRSP contribution for 2020. (b) Assume that Brian contributes the amount calculated in Part (a) above to his RRSP. Calculate Brian's 2020 minimum: Net Income For Tax Purposes Taxable income, and Federal Tax Payable. Ignore provincial income taxes, any instalments he may have paid during the year, any income tax withholdings that would be made by his employer, and GST/HST/PST considerations. Note: You have to type your answers in an Excel file, upload and submit your file on Canvas. You must provide detailed workings and explanations to the tax treatment of various items to facilitate the awarding of marks