Jean Walls owns a scuba diving business (sole proprietorship) in Prince Rupert, BC She is 45 years old, married and has 2 kids (age 13 16) Her husband Jack is a local painter and poet and has Net Income for Tax Purposes of $7,500 from his painting and poetry business in 2019 Jean has a background in accounting and prepares her financial statements in accordance with GAAP Her net income for accounting purposes was $122,000 in 2019 and included the following $ 4,000 gain on the sale of boat used in her business $18,000 meals and entertainment expenses $12,000 amortization $ 3,000 for a holiday retreat for her and Jack to celebrate their anniversary $ 5,000 in penalties from the ministry of fisheries and wildlife Her UCC balances at the beginning of 2019 were as follows Class 7 $45,000 Class 8 $20,000 During 2019 her business had the following capital transactions She purchased some scuba diving equipment for $15,000 She sold her old boat for $47,000 It had a net book value of $43,000 and originally cost $50,000 Purchased her new boat (imported from the U S A ) for $65,000 She sold all of the class 8 items during the year for $9,000 She is calculating the employment income for her only employee (Sal Teephish) Sal received the following from the business during the year $45,000 gross salary $700 prepaid visa gift card as a reward for being an employee for 10 years $600 tuition paid for an advanced scuba diving instructor course Other activity in the year She received a $6,000 non eligible dividend during the year Her kids go to a 2 week poetry and painting camp each summer This year, the camp cost $600 per week for each child She gave a $700 charitable donation to Greenpeace She donates to Greenpeace every year She paid $8,000 in federal income tax instalments to CRA during the year She has a $5,000 net capital loss available from a bad investment in 2016 Requirements Using S(3) format calculate Jeans net federal tax payable for the year Calculate Sals employment income for the year (including any benefits) Clearly state any other issues you can think of (tax planning, additional information needed etc )

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Posted on Sep 20, 2024

Jean Walls owns a scuba-diving business (sole proprietorship) in Prince Rupert, BC. She is 45 years old, married and has 2 kids (age 13 &

Jean Walls owns a scuba-diving business (sole proprietorship) in Prince Rupert, BC. She is 45 years old, married and has 2 kids (age 13 & 16). Her husband Jack is a local painter and poet and has Net Income for Tax Purposes of $7,500 from his painting and poetry business in 2019.

Jean has a background in accounting and prepares her financial statements in accordance with GAAP. Her net income for accounting purposes was $122,000 in 2019 and included the following:

$ 4,000 gain on the sale of boat used in her business
$18,000 meals and entertainment expenses
$12,000 amortization
$ 3,000 for a holiday retreat for her and Jack to celebrate their anniversary.
$ 5,000 in penalties from the ministry of fisheries and wildlife

Her UCC balances at the beginning of 2019 were as follows:

Class 7: $45,000
Class 8: $20,000

During 2019 her business had the following capital transactions:

She purchased some scuba diving equipment for $15,000
She sold her old boat for $47,000. It had a net book value of $43,000 and originally cost $50,000.
Purchased her new boat (imported from the U.S.A.) for $65,000
She sold all of the class 8 items during the year for $9,000.

She is calculating the employment income for her only employee (Sal Teephish). Sal received the following from the business during the year:

$45,000 gross salary
$700 prepaid visa gift card as a reward for being an employee for 10 years.
$600 tuition paid for an advanced scuba diving instructor course

Other activity in the year

She received a $6,000 non-eligible dividend during the year.
Her kids go to a 2-week poetry and painting camp each summer. This year, the camp cost $600 per week for each child.
She gave a $700 charitable donation to Greenpeace. She donates to Greenpeace every year.
She paid $8,000 in federal income tax instalments to CRA during the year.
She has a $5,000 net capital loss available from a bad investment in 2016.

Requirements

Using S(3) format calculate Jeans net federal tax payable for the year
Calculate Sals employment income for the year (including any benefits)
Clearly state any other issues you can think of (tax planning, additional information needed etc.)