CANADIAN TAX COURSE

It is February, 2021. Three members of the Blendin family (Candace, James and Susan) have all asked you to determine their taxable income and Federal income tax payable for 2020. Each of these taxpayers would like to minimize the amount of income tax they must pay. In preparing their income tax information, you must include all your calcualtions, even if the result of your calculation is zero or nil. For this question, you may ignore GST/HST/PST.

Candace Blendin and her second husband, James, live in Nanaimo, BC with three of their children, Patrick, Carolina, and Ben. They moved to Nanaimo from Tofino, BC on September 1, 2020 so that James could study accounting as a full-time student at Vancouver Island University. Candace is the sole owner of a retail beach wear store in Tofino, Surfs Up. She has chosen not to sell the store as she has an excellent store manager and she is able to visit Tofino regularly to assist with things.

Following is information required to prepare the tax returns for Candace, James, and their family for 2020:

1) During 2020, Candace received $6,300 in non-eligible dividends and $29,800 in eligible dividends. 2) When the family decided to move to Nanaimo in 2020, their home in Tofino was sold privately by James for $250,000. The original cost of the home was $175,000. Neither James nor Candace have owned any other property. 3) Prior to the move to Nanaimo, Candace listed several items on Kijiji, and was successful in finding buyers for the following items: Adjusted Cost Base Proceeds of Disposition Collector Car $45,000 $61,000 Painting 800 13,000 Antique Furniture 21,000 12,000 Jewellery 32,000 26,000 Using some of the proceeds from her Kijiji sales, Candace paid $70,000 of instalments for income taxes for the year. 4) Candace is divorced from her former husband, John. The original written divorce agreement required Candace to make payments for the support of John and their son, Chris, who lives with John. Payments were set at $400 per month for John and $300 per month for Chris. Payments are made on the first day of each month, and John has complete discretion as to their use. Effective June 1, 2020, the agreement was changed to increase the payments to John and Chris to $500 per month and $400 per month, respectively. In order to help John with winter holiday expenses, Candace made the payment for January 1, 2021 on December 10, 2020. No payments were missing or delayed for 2020. 1) During 2020, Candace received $6,300 in non-eligible dividends and $29,800 in eligible dividends. 2) When the family decided to move to Nanaimo in 2020, their home in Tofino was sold privately by James for $250,000. The original cost of the home was $175,000. Neither James nor Candace have owned any other property. 3) Prior to the move to Nanaimo, Candace listed several items on Kijiji, and was successful in finding buyers for the following items: Adjusted Cost Base Proceeds of Disposition Collector Car $45,000 $61,000 Painting 800 13,000 Antique Furniture 21,000 12,000 Jewellery 32,000 26,000 Using some of the proceeds from her Kijiji sales, Candace paid $70,000 of instalments for income taxes for the year. 4) Candace is divorced from her former husband, John. The original written divorce agreement required Candace to make payments for the support of John and their son, Chris, who lives with John. Payments were set at $400 per month for John and $300 per month for Chris. Payments are made on the first day of each month, and John has complete discretion as to their use. Effective June 1, 2020, the agreement was changed to increase the payments to John and Chris to $500 per month and $400 per month, respectively. In order to help John with winter holiday expenses, Candace made the payment for January 1, 2021 on December 10, 2020. No payments were missing or delayed for 2020