Case Study (Mark and Carice)

It is March 1" of 2021 and Mark and Carice, Canadian Citizens of Ontario, have come to you asking for your assistant to clarify and explain their 2020 income tax returns. They are a married couple and have three children: Maxim, Yola and John aged 15, 12 and 8 years respectively, Mark (51 years old) works full-time for a Canadian scientific underwater research and development corporation (his employer) located in Kingston, Ontario, Mark has worked for this corporation out of the Kingston office for nine years. Mark earned a net income for tax purposes of $85,000 in 2020. His employer withholds maximum CPP contributions and El premiums. Carice (45 years old) worked a part-time for a convenience store in Kingston from January 2020 to February 2020. She earned a net income for tax purposes of $3,525 in 2020. All of the children are in good health and none of them have income of their own. Mark and Carice came up to you to discuss the following tax matters:

Questions:

1. Mark and Carice and their three children returned to Canada in February of 2021 following ten subsequent months saling trip in the Gulf of Mexico and Caribbean Sea where Mark was performing scientific research for his employer. Since the family only resided in Canada for the first four months of 2020 (121 days). Mark and Carice are wondering to know their residency status in 2020, Mark said "Does the fact that we were only in Canada for 121 days in 2020 affect our residency status ?

2. Mark said in addition to our family home located in Kingston, Ontario, we as a couple, own a cottage located in Muskoka District Municipality, Ontario, which we usually visit in the summer. We are considering selling both real estate properties next year (2021) and moving to USA". The cottage cost $320,000 and has a current market value of $520,000. Their family home originally cost $300,000 and is now valued at $600,000. The couple has owned the cottage for five years and the home for ten years. Carice said "I heart that if a property qualifies as a principal residence, we can use the principal residence exemption to reduce or eliminate any capital gain otherwise occurring. for income tax purposes, on the disposition of the property. So, if we sell our home and coffage. how do we know which one (home or cottage) is the principal residence?" Mark raised his hand and said "How we could calculate the number of years that ench property would be designated as the principal residence if we were to sell both homes this year.

3. Carice said: "Let's suppose that I would stay in Canada this year and years after and I have a plan to establish a sole proprietorship of an unincorporated business that would sell security related products to both retail customers and building contractors if the business requires to get works services from parties, Carice asked "Could you please briofly explain the cons and proof hiring independent contractors, as opposed to hiring employees to get the required services.

Can you help me answer the 3 questions above. It's canadian taxation course.