FIN 4013 Personal Financial Planning I

Assignment 3 Group #1

Due date: August 25, 2016

Answers must be the result of your own work. If you need to use specific information from a banks website or the CRA website, for example, be sure to reference it.

Sylvia Grandon was born on July 3, 1986, is single, and works as an executive for an engineering company in Ontario. The following information is contained in Sylvias 2012 T4 slip from her employer:

Employment income $82,000.00

Employment Insurance premium 839.97

Canada Pension Plan contribution 2,306.70

Registered Pension Plan contribution 4,800.00

Income Tax paid 19,900.00

On November 14, 2012, Sylvia contributed $6,000.00 to her RRSP and received a receipt for income tax purposes. She contributed this amount because her accountant advised her that she would be able to fully claim it in 2012.

In late 2011, Sylvia purchased $40,000.00 worth of Canadian Tire shares which she financed with an investment loan that charged her $800.00 in interest during 2012. During 2012, she received $820.00 in dividends from her shares. Late in 2012, Sylvia sold all of her Canadian Tire shares for proceeds of $44,000.00.

Sylvia rents a safety deposit box at her local bank for an annual fee of $125.00.

Prepare the 2012 income tax return for Sylvia, including the T1 General and any relevant schedules. You may use the various tables from Chapter 7 of our textbook, which contain information pertaining to the year 2012.

For the purpose of this exercise, you can use the attached CRA forms for 2012.

[14 marks]

From the point of view of overall financial planning, comment on how you feel she could engage in better tax planning in the future. In particular, identify at least three specific strategies she could use and show using your income tax return, as well as other means, how their implementation would result in overall income tax savings. [6 marks]

Be sure to show all your work for any calculations that you need to perform.