Example of Epic Proportions Twenty-five years ago Ronaldo, an accomplished cyclist, purchased a small custom carbon fiber wheel builder Zircles Inc. He applied their expertise in carbon fiber to other bike components and transitioned the company to an OEM supplier. He sold the operating company last year for $5 million and retained the real estate which is held in a holding company, Zquares Co.("ZC), which is CCPC. You are presented with the following financial information and asked to calculate his tax liability for 2020. Ronaldo wants to minimize tax payable and will utilize any deductions and/or credits permitted. Zquares Inc. Management salary $ 100,000 Dividends Paid from GRIP pool $ 50,000 Capital Dividends Paid from Share Capital $ 20,000 Interbike Trade Show With spouse, in Hawaii $ 10,000 Gym membership $ 1,000 Use of Range Rover Market value $ 50,000 Annual personal KMs 15,000 MSRP $ 90,000 Annual work KMs 25,000 Investments Non-registered investment portfolio Interest $ 11,000 Public company dividends from Canadian stocks $ 22,000 Public company dividends from American stocks in CAD $ 44,000 TFSA Interest $ 3,000 Public company dividends from Canadian stocks $ 5,000 Public company dividends from American stocks in CAD $ 7,000 Rental property in Kelowna (residential) Rental revenue $ 24,000 Property manager $ 2,000 Utilities $ 3,000 Property tax $ 4,000 Spouses Investments Sara Sara received a $200,000 loan from Ronaldo in 2020. The loan was made at the then prescribed rate of 1.5%. The prescribed rate is presently 2%. The $200,000 was invested in a bond portfolio that paid $9,000 interest in 2020. Sara also received a $500,000 from Ronaldo as a gift in 2020. The $500,000 was invested in Canadian public company shares that paid $40,000 in dividends and produced $60,000 in capital gains. Sara has no other sources of income. Childs Investments Clara (14 years old) Clara received a $100,000 as a gift in 2020 which was invested in shares of Canadian public companies. These shares paid $4,000 in dividends and produced $20,000 in capital gains. Ancillary Information Spousal support payments $ 36,000 Child support payments $ 18,000 WCB compensation benefit received $ 10,000 Unused RRSP contribution room and deductions nil Charitable donation by Ronaldo $ 5,000 Charitable donation by Sara $ 5,000 In 2020 Ronaldo made the following contributions: o Claras RESP contributions of $2,500 each year $ 2,500 o Saras TFSA maximum contribution each year $ 6,000 o Saras RRSP unused contribution room $15,000 $ 5,000 In 2020 the family was rear ended in a car accident and had the following medical expenses: o Sara Physio $ 3,500 o Clara Medicine and Physio $ 4,500 o Ronaldo Medicine and Physio $ 6,500 Ronaldo would like to make maximum contributions to his TFSA and RRSP. Each year Ronaldo made the maximum TFSA contribution. Ronaldo also wants to know the consequence if he over contributes $5,000 to his RRSP. Enhanced 38% 15.02% Not eligible 15% 9.03% RRSP $26,500