Peter Henderson runs a gardening business in Richmond, 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 married and has a 6-year-old daughter.
• He sold shares in a Canadian public company for $1,800. He originally purchased the shares in 2016 for $1,250.
• He sold a painting for $1,300, it was originally purchased for $800.
• His wife is a full-time student. She earned $4,000 during the year and had tuition fees of $6,000. She'd like to help the family reduce its tax bill this year.
• He received a $900 non-eligible dividend during the year
• His daughter was in daycare for 34 weeks during the year (the entire time that his wife was in school). The total cost was $7,500
• He has a non-capital loss of $1,500 available for carryover from 2013 and a net capital loss of $3,500 available for carryover from 2019.

He prepares his financial statements in accordance with GAAP. His net income for accounting purposes was $66,000 in 2021 and included the following (provide clear ITA citations for each business reconciliation item):

• $1,000 accounting gain on the sale of some older gardening equipment
• $2,000 amortization

Other items related to his business

• He paid $2,500 in life insurance premiums during the year. These amounts were capitalized to the Balance Sheet for accounting purposes. Purchasing life insurance was a requirement for obtaining a recent bank loan for the business.

CCA information

• UCC balances at January 1, 2021 were as follows: Class 8 (multiple assets) $6,000
• During the year he purchased a canoe for $4,000. He needed the canoe to access the properties of some of his clients who have homes/gardens on a local boat-access-only lake (make sure to clearly state which CCA class you added this to and why).
• He sold an older piece of gardening equipment during the year for $1,400. Original cost $3,000.

During the year, he made 4 federal tax installments of $1,100 each (total $4,400) consistent with the prior year method (i.e. based on his prior-year tax payable). He intends to file his return tomorrow (September 1st, 2022) and needs to know how much he needs to pay CRA (or how much of a refund he is going to get). This is his first time filing late.

Required: 

Please calculate his 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 for items you have excluded from the calculation) and show year-end carryover balances.