James hired you to prepare his personal tax return for the year 2019, as well as for his common-law partner, Susan Bond.

James was born on November 1, 1969. He is divorced but currently lives with Susan Bond, his common-law partner, at 123 Main Street, Anytown, Ontario, K0H 1H0. Both have been living together for several years now. James Social Insurance Number (SIN) is 527-000-145. Susans SIN is 130-692-544. Susan was born on December 2, 1969 and has been blind since birth but still manages to work as a bookkeeper for James business - see separate T4 slip attached issued to Susan for 2019 and financial information for James' business in the Appendix below. Susan also has income from joint investments with James - see further below.

During 2019, James received bi-weekly pension payments from his former employer's pension plan for a total pension income of $70,000 - see T4A slip attached issued to James for 2019 (box 16). Federal income tax of $10,000 was withheld at source on that pension income - see box 22 of the T4A slip.

James has spousal support obligations from his previous marriage. He is required to pay $1,000 per month to his former spouse (Mary Doode; SIN: 527-000-129) in accordance with a court order. During the year 2019, James was only able to pay 6 months worth of support. James and Susan have no children but James' older brother Rick lives with them on a permanent basis since 2015 as he cannot live on his own due to a permanent mental disability. Rick was born on June 10, 1966 and has $9,000 of social assistance income for 2019 under the Ontario Disability Support Program. His SIN is 527-000-947. Forms T2201 have already been filed with CRA in previous years for both Susan and Rick and their condition has not changed since.

During 2019, James received $12,000 of eligible dividends on shares he owns of the Great Bank of Canada, a Canadian public company - see the T5 slip James received from the bank (box 24) for 2019. No income tax was withheld on that dividend. James and Susan earned interest income for a total of $7,000 during 2019 from a joint investment account (co-owned 50% each) - see the T5 slip James and Susan received from the bank as co-owners (box 13). No income tax was withheld on that income. During the year 2019, James met with a financial planner to obtain investment advice on how to maximize his investment income. Fees of $2,000 were paid by James in 2019 to the financial planner. Following the advice obtained, James sold 1,500 shares of the Great Bank of Canada (a publicly traded company) that he had acquired over the last 10 years with an average cost of $28.00 per share. The shares were sold on June 1, 2019 at a price of $65.00 per share, on which a 1% commission was paid to a broker ($0.65 per share).

Rental Activities

James and Susan acquired jointly (50% each) a residential property during 2019 which they rent out to earn income. The property was acquired on February 1, 2019 and rented-out for a 1-year period to a young family that recently moved to the area for $3,000/month. Below is the information relating to that property for 2019, which is co-owned in equal share by James and Susan (50% each):

Address: 121 Main Street, Anytown, ON (co-owned by James and Susan equally, 50% each)

Cost of property purchased: $355,000 of which $45,000 was for the land.

Cost of additions made to the building in December 2019: $80,000 (addition of a garage). Due to this addition, it was agreed that the rent for the home will increase to $3,500/month starting January 1, 2020.

Revenues

Gross Rents $30,000

Expenses

Property taxes $3,200

Insurance 1,100

Interest on mortgage 6,300

Mortgage principal 1,525

Regular maintenance & repairs 3,000

During 2019, James and Susan sold a cottage they also jointly owned (50% each) and used exclusively for their personal enjoyment, located at 123 Beach Lane, AnyLake, ON. They had purchased the cottage back in 2008 at a cost of $75,000. They sold the cottage on June 15, 2019 for $250,000 cash. All transaction costs were borne by the purchaser. James and Susan do not want to designate the cottage as their principal residence because they feel their current home has a much greater accrued gain and want to preserve the principal residence tax exemption for that property instead. James also sold a boat he owned on the lake for their personal use when at the cottage. The boat had a cost of $25,000 and was sold for $15,000 on June 20, 2019.

During 2019, James enrolled in a highly specialized mechanics course with a local college. James paid tuition fees of $10,000 for 2019 - see form T2202A sent by the college for 2019. James wants to claim the maximum credit he can this year and carry over any unused balance.

James contributed $20,000 into his own RRSP on September 1, 2019. James wants to deduct the maximum amount this year. His unused RRSP Deduction Room at the end of 2018 was $9,500 and his Earned Income for 2018 (business income) was $50,000. He had no Pension Adjustment for 2018. Susan also contributed $5,000 to her own RRSP on the same date. Her unused RRSP Deduction Room at the end of 2018 was $1,500 and her Earned Income for 2018 was $15,000. She had no Pension Adjustment for 2018.

While talking with James, you discovered that as a former member of the Canadian Armed Forces he remains on call for high-risk search and rescue missions. During the year 2019, James worked 275 hours as a volunteer on search and rescue missions for which he did not receive any compensation.