Question
Comprehensive Individual Tax Payable The following information relates to Mitchell Jones for the year ending December 31, 2020: Cash Receipts Salary From Swiftcorp Inc. $
Comprehensive Individual Tax Payable
The following information relates to Mitchell Jones for the year ending December 31, 2020: Cash Receipts
Salary From Swiftcorp Inc. |
| $ 35,000 |
Revenue From Farming |
| 36,000 |
Drawings From Toonie Plus Proprietorship |
| 9,000 |
Interest On Savings Account |
| 4,450 |
Lottery Winnings |
| 1,600 |
Canada Pension Plan Benefits |
| 5,100 |
Loans To Friends: Interest Received Principal Repaid | $12,000 21,000 |
|
|
| 33,000 |
Cash Inheritance From Deceased Aunt |
| 25,000 |
Eligible Dividends From Canadian Public Corporations (100%) |
| 44,000 |
Dividends From U.S. Corporations ($10,000 in CAN$) net of 15% withholding tax |
| 8,500 |
Proceeds From Sale Of Land |
| 111,500 |
Total Cash Receipts $313,150 Cash Disbursements
Farm Expenses | $ 45,000 |
Personal Funds Invested In Proprietorship | 42,000 |
Interest Paid On Bank Loan | 2,300 |
Funds Spent on Lottery Tickets | 1,000 |
Life Insurance Premiums | 11,000 |
Mortgage Payments on Personal Residence | 15,000 |
Charitable Donations | 2,700 |
Contributions To Federal Conservative Party | 500 |
Total Cash Disbursements $119,500
Other Information:
- Mr. Jones is 71 years old. His wife, Janice, is 61 and is confined to a wheelchair. She is in ill health and has no income of her own.
- Mr. Jones owns 45 percent of the shares of Swiftcorp Inc., the corporation that employs him. As a result, no EI premiums were withheld. Since Mr. Jones is over 70 years old, he does not have deductions from salary for CPP or owe them on his proprietorship income.
- Mr. Joness farming operation is a sideline business that he started a year ago, believing organic produce would improve his wife's health. With his vast business experience, he is confident he can make the operation profitable within another year.
- The Toonie Plus proprietorship began operations on May 1, 2020 and has a fiscal year end of December 31st. The proprietorship had net business income of $28,300, determined in accordance with the Income Tax Act, for the period May 1 to December 31, 2020. The bank loan on which interest was paid was used to finance Mr. Joness investment in the proprietorship. The interest was not deducted in the calculation of net business income.
- The land that was sold during 2020was purchased at a cost of $23,000 three years ago. Mr. Jones had intended to build a vacation home on it.
- Mr. Jones applied for and receives OAS benefits. Due to his high levels of income the government has withheld some of the OAS payments. On his T4A(OAS) it shows taxable benefits of $7,000 and the OAS payments withheld of $7,000.
Required:
- Calculate Mr. Joness Net Income and Taxable Income
- Calculate Mr. Joness minimum Federal tax payable (including any OAS benefits repayment) for the year ending December 31, 2020.
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