PROBLEM FOUR 4

The amount of the personal tax credits would be as follows:

Ms. Jones is married and has Net income for tax purposes of 123000, none of which is employment income or income from self-employment. Her husband is currently unemployed, but has interest income from investments of 3750. Her 20 year old dependent son attends university and lives at home. Her son has net income for Tax purposes of 4800 and does not agree to transfer his tuition credit to her.

1. Ms. Jones will qualify for the following credits:

Basic Personal Amount $12,069

Spousal ($12,069 - $3,750) 8,319

Total Credit Base $20,388

Rate 15%

Total Credits $ 3,058

There is no tax credit available for her son.

2. Mx. Martin is 66 years old and has Net Income for Tax Purposes of 28750. This total is made up of OAS of 7400, plus pension income of 21350 from a former employer. Her husband is 51 years old and blind. He has no income of is own, ignore the possibility that Ms. Martin would split her pension income with her husband,

Ms. Martin will qualify for the following credits:

Basic Personal Amount $12,069

Spousal Including Infirm Amount

($12,069 + $2,230) 14,299

Age 7,494

Pension 2,000

Spouses Disability 8,416

Total Credit Base $44,278

Rate 15%

Total Credits $ 6,642

As Ms. Martins Net Income For Tax Purposes is less than the relevant income thresholds, there will be no reduction in her age credit or clawback of her OAS benefits.

3. Mr. Sharp ahs Net Income For Tax Purposes of 72350, none of which is employment income or incomr from self-employment. He lives with his common-law partner and her three children from a previous relationship. The children are aged 13.15.20. the 20 year child is dependent because of a physical disability. However, the disability is not sufficiently severe to qualify for the disability tax credit. Neither the common-law partner nor any of the children have any source of income.

Mr. Sharp will qualify for the following credits:

Basic Personal Amount $12,069

Spousal 12,069

Canada Caregiver Amount (20 Year Old Child) 7,140

Total Credit Base $31,278

Rate 15%

Total Credits $ 4,692

4. Mr. Barton was divorced two years ago and maintains a residence separate from his former spouse. He has custody of the three children of the marriage, aged 8.9.10 and receives 2500 per month in child support payments. Mr. Barton has net income for tax purposes of 62300, none of which is employment income or income from self-employment. Non of the children have any income of their own.

Mr. Barton will qualify for the following credits:

Basic Personal Amount $12,069

Eligible Dependant (Any Child) 12,069

Total Credit Base $24,138

Rate 15%

Total Credits $ 3,621

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5. Ms. Cole has Net Income for tax purposes of 175000, all of which is employment income. Her employer has withheld and remitted the required EI and CPP amounts. She was married on Dec. 1, 2019. Her new husband is an accounting student with a large firm. His salary for the period Jan 1 through Nov 30, 2019 was 33000. For the month of Dec 2019 his salary was 3000.

Ms. Cole will qualify for the following credits:

Basic Personal Amount $12,069

Spousal ($12,069 - $36,000) Nil

EI (Maximum) 860

CPP (Maximum) 2,749

Canada Employment 1,222

Total Credit Base $16,900

Rate 15%

Total Credits $ 2,535

Her husbands income will have to be considered for the entire year and, with him having a total of $36,000 ($33,000 + $3,000), the spousal credit will be eliminated.

6. Mr. Smead has net income for tax purposes of 85000, none of which is employment income or income from self-employment, he lives in a residence that he has owned for many years. He doe not currently have a spouse or common-law partner. However, he has custody of his 10 years old son who lives with him. Also living with him is his 68-year-old, widowed mother, she has a physical infirmity. However, it is not sufficiently severe for her to qualify for the disability tax credit. Mr., Smeads son had no income during the year. His mother had OAS benefits and pension income which totaled 18500 during the year.

Mr. Smead will qualify for the following credits:

Basic Personal Amount $12,069

Eligible Dependant - Son 12,069

Canada Caregiver - Mother

[$7,140 - ($18,500 - $16,766)] 5,406

Total Credit Base $29,544

Rate 15%

Total Credits $ 4,432

Given the mothers high level of income, the eligible dependant credit should be claimed for the son. This will allow for the Canada caregiver credit to be claimed for the mother.