Question
Eric Latefiler, age 39, has not filed his personal incometax returns since 2017. Assume you are his tax accountant.He has provided you with the following
Eric Latefiler, age 39, has not filed his personal incometax returns since 2017. Assume you are his tax accountant.He has provided you with the following correctly calculated information:
2017 2018 2019
Employment income $14,000 $25,000 $165,000
Warehouse Rental income (loss) 5,000 (3,000) 5,000
Business income (loss) (32,000) 21,000 30,000
Capital gains (capital losses):
Listed personal property 6,000 (7,000) 4,000
Other personal-use property 6,000 (3,000) 2,000
Other capital items 5,000 13,000 (8,000)
Additional Information not incorporated in the calculation above
1) Losses carried forward from 2015:
Non-capital losses $20,000
Net capital losses $30,000
2) The 2019 capital loss of $8,000 includes a business investment loss of $3,000
3) Eric was separated from his spousein 2015 and has custody of their 10 year old daughter
pursuant to a court agreement.Court also ordered Eric to pay $7,000 maintenance
payment per year to his former spouse.Eric has been paying this since 2015.
4) In 2019 Eric paid$1,500 in legal fees to defend a tax re- assessment for 2016 year.
5) Eric paid $12,000 of child care fees to YMCA in 2019.He paid $0 for child care in 2017 and 2018.
6) In December 2019, Eric contributed $20,000 to to his RRSP.His RRSP limit for 2019 was $18,500.
7) In 2019, as Eric made more employment and business income, he donated $5,000 to a registered
Canadian charity and $1,000 to an American charity.
8) Eric purchased and moved into a condo in 2019.He never owned a home prior to 2019.
Required
[NOTE: YOU WILL NEED TO submit SOLUTION AND UPLOAD AS SCANNED PDF.TYPED RESPONSE WILL NOT BE ACCEPTED]
SHOW ALL YOUR CALCULATIONS
Part A [14 Marks]
Calculate Eric'staxable income for 2017, 2018 and 2019 years.. [Hint: You need to incorporate loss carry-back and loss carry forward rules under Division in computing taxable income]
Part B [12 Marks]
Calculate Eric's Federal net income tax liability for 2019 year only. [Do not spend time to calculate 2017 and 2018 net income tax liability]
Part C [2 Mark]
Eric wants to know the filing due date of his 2019 income tax return.
Part D [2 Mark]
Eric wants to understand(highlight 2 consequences) the consequenes of late filing his income tax returns.
Part E [6 MARKS]
Calculate Eric's RRSP limit for 2020.Assume his pension adjustment was always $0.Assume he has no contribution room remaining from prior years.
Part F [4 MARKS]
Eric wants to contribute $35,000 on April 25th 2020 towards his RRSP. Based on your calculation above, advice Eric the tax implications of contributing $35,000 to his RRSP.What other tax sheltered savings options are available to Eric?
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