Joseph Delvechio runs a dress repair business in Surrey, B C as a sole proprietorship (i e it is his own unincorporated business) He has provided you with the following information for the year (2021) He is single and doesnt have any children He contributed $4,000 to his RRSP in the year, the entire amount is deductible He received cheques for a $500 capital dividend and a $600 non eligible dividend in the year He has a non capital loss of $8,000 available for carryover from 2017 and a net capital loss of $3,000 available for carryover from 2019 Joseph prepares his financial statements in accordance with GAAP His net income for accounting purposes was $62,000 in 2021 and included the following (provide clear ITA citations for each of these items) $1,000 accounting loss on the sale of an industrial sewing machine $2,500 amortization Other items related to his business $600 in landscaping costs were capitalized to the Balance Sheet during the year under GAAP $2,500 in Capital Cost Allowance (CCA) is available There was an $800 Terminal Loss on the sale of an asset During the year Joseph sold the following personal assets as he needed some extra cash to fund his business A collection of rare books about the history of dress repair The collection originally cost him $800 (in 2015) and he was able to sell it for $1300 in 2021 A large collection of hockey cards he purchased in 2016 for $1,100 He was able to sell the collection for $900 in 2021 During the year, Joseph made 4 federal tax installments totalling $5,200 consistent with the no calc method He intends to file his return tomorrow (September 1, 2022) and needs to know how much he needs to pay CRA (or how much of a refund he is going to get) He has never filed late before Please calculate Josephs net tax payable (including any penalties and interest) for 2021 Make sure to clearly show your work (use S3 format), explain support relevant amounts and assumptions where necessary (including items you have excluded from the calculation) and show year end carryover balances

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Posted on Feb 19, 2022

Joseph Delvechio runs a dress repair business in Surrey, B.C. as a sole-proprietorship (i.e. it is his own unincorporated business). He has provided you with

Joseph Delvechio runs a dress repair business in Surrey, B.C. as a sole-proprietorship (i.e. it is his own unincorporated business). He has provided you with the following information for the year (2021):

He is single and doesn’t have any children.
He contributed $4,000 to his RRSP in the year, the entire amount is deductible.
He received cheques for a $500 capital dividend and a $600 non-eligible dividend in the year.
He has a non-capital loss of $8,000 available for carryover from 2017 and a net capital loss of $3,000 available for carryover from 2019.

Joseph prepares his financial statements in accordance with GAAP. His net income for accounting purposes was $62,000 in 2021 and included the following (provide clear ITA citations for each of these items):

$1,000 accounting loss on the sale of an industrial sewing machine
$2,500 amortization

Other items related to his business

$600 in landscaping costs were capitalized to the Balance Sheet during the year under GAAP.
$2,500 in Capital Cost Allowance (CCA) is available
There was an $800 Terminal Loss on the sale of an asset

During the year Joseph sold the following personal assets as he needed some extra cash to fund his business:

A collection of rare books about the history of dress repair. The collection originally cost him $800 (in 2015) and he was able to sell it for $1300 in 2021.
A large collection of hockey cards he purchased in 2016 for $1,100. He was able to sell the collection for $900 in 2021.

During the year, Joseph made 4 federal tax installments totalling $5,200 consistent with the no-calc method. He intends to file his return tomorrow (September 1, 2022) and needs to know how much he needs to pay CRA (or how much of a refund he is going to get). He has never filed late before.

Please calculate Joseph’s net tax payable (including any penalties and interest) for 2021. Make sure to clearly show your work (use S3 format), explain/support relevant amounts and assumptions where necessary (including items you have excluded from the calculation) and show year-end carryover balances.