Ever since his wifes death, John Ambush has faced difficult personal and financial circumstances. His job provides him with fairly good income but requires him to hire a caregiver for his daughters, ages 8 and 10, nearly 20 days a month. This requires him to use in-home child care services that consume a large part of his income. Since the Ambushes live in a small apartment, this arrangement has been very inconvenient.

Although John has created an investment fund for his daughters education and for his retirement, he has not sought to select investments that offer tax benefits. Overall, he needs to look at several aspects of his tax-planning activities to find strategies that will best serve his current and future financial needs.

John has assembled the following information for the current tax year:

Earnings from wages Interest earned on GIC RRSP deduction Savings account interest Federal income tax deducted at source Total non-refundable tax credit amounts Child care deduction

Filing status: Head of household

$57,300 $ 235 $ 2,500 $65 $ 4, 959 $13,200 $ 6,500

1. Calculate the following (10 marks)

2. a) What is Johns 2016 federal taxable income? (Refer to Exhibit 3-1, page 83) b) What is his total 2016 federal tax liability? What is the average 2016 federal

   tax rate? c) Will John receive a tax refund or owe additional taxes to the federal government for 2016?