Question 4 (25 marks) The following information relates to the investment income earned by Mr. Adam Uppe for 2020: I 1) Eligible dividends received from taxable Canadian corporations: DuPont of Canada Limited Bell Canada Limited Cott Corporation $ 480 (actual amount received) $ 1,125 (actual amount received) $ 2,375 (actual amount received) 2) Adam owns shares in Good Investments Limited, a Canadian-controlled private corporation. During 2020, the company paid dividends out of its capital dividend account. Adam received $ 2,300 of these dividends. 3) On January 2, 2020, Adam transferred his ownership of 1,000 shares of Denison Mines Inc., a taxable Canadian corporation, to his daughter Penelope, as birthday present for her sixteenth birthday. The original cost of these shares was $ 5,000. The Fair Market Value of these shares was $ 6,500 at the date of transfer to his daughter. Penelope received $500 (actual amount) in dividends from these shares during 2020 4) During 2019, Adam transferred a Hydro One bond to his wife, Barbara. Barbara received interest on this bond in the amount of $1,825 during 2020. Adam did not recognize any capital gain or loss in 2019 as a result of this transfer. 5) On June 1, 2019, Adam purchased a five-year Guaranteed Investment Certificate in the amount of $ 10,000 at an interest rate of 7.5%. 6) On September 1, 2020, Adam purchased a 90-day $15,000 Treasury Bill at a cost of $14,352 7) During 2020, Adam received dividends from IBM Corporation, a U.S. company. The actual amount of dividends received in 2020, net of withholding taxes of 15%, was $1,275. Assume that the average exchange rate for 2020 was $1.00 U.S. = $1.1420 Canadian. 8) Adam paid the following amounts in 2020: Accounting fees (not for preparation of his tax return) $ 300 Interest on funds borrowed to purchase investments 1,600 Interest on house mortgage 2,575 I Equired: a) Calculate Adam's NET INVESTMENT INCOME for 2020. Remember, capital gains are NOT considered investment income. b) Calculate the federal dividend tax credit, which Adam will be able to claim on his 2020 personal income tax return. C) Other than amounts included in investment income in your answer to part (a) indicate any additional tax implications for Adam as a result of the transfer of his shares to his daughter, as described in item (3). Question 4 (25 marks) The following information relates to the investment income earned by Mr. Adam Uppe for 2020: 1) Eligible dividends received from taxable Canadian corporations: DuPont of Canada Limited Bell Canada Limited Cott Corporation $ 480 (actual amount received) $ 1,125 (actual amount received) $ 2,375 (actual amount received) 2) Adam owns shares in Good Investments Limited, a Canadian-controlled private corporation. During 2020, the company paid dividends out of its capital dividend account. Adam received $2,300 of these dividends. 3) On January 2, 2020, Adam transferred his ownership of 1,000 shares of Denison Mines Inc., a taxable Canadian corporation, to his daughter Penelope, as birthday present for her sixteenth birthday. The original cost of these shares was $ 5,000. The Fair Market Value of these shares was $ 6,500 at the date of transfer to his daughter. Penelope received $500 (actual amount) in dividends from these shares during 2020 4) During 2019, Adam transferred a Hydro One bond to his wife, Barbara. Barbara received interest on this bond in the amount of $1,825 during 2020. Adam did not recognize any capital gain or loss in 2019 as a result of this transfer 5) On June 1, 2019, Adam purchased a five-year Guaranteed Investment Certificate in the amount of $10,000 at an interest rate of 7.5%. 6) On September 1, 2020, Adam purchased a 90-day, $15,000 Treasury Bill at a cost of $14,352. 7) During 2020, Adam received dividends from IBM Corporation, a U.S. company. The actual amount of dividends received in 2020, net of withholding taxes of 15%, was $1,275. Assume that the average exchange rate for 2020 was $1.00 U.S. = $1.1420 Canadian 8) Adam paid the following amounts in 2020: Accounting fees (not for preparation of his tax return) $ 300 Interest on funds borrowed to purchase investments 1,600 Interest on house mortgage 2,575 (continued next page) BTAX1 Alynn Boyle Required: a) Calculate Adam's NET INVESTMENT INCOME for 2020. Remember, capital gains are NOT considered investment income. b) Calculate the federal dividend tax credit, which Adam will be able to claim on his 2020 personal income tax return. c) Other than amounts included in investment income in your answer to part (a) indicate any additional tax implications for Adam as a result of the transfer of his shares to his daughter, as described in item (3). Question 4 (25 marks) The following information relates to the investment income earned by Mr. Adam Uppe for 2020: I 1) Eligible dividends received from taxable Canadian corporations: DuPont of Canada Limited Bell Canada Limited Cott Corporation $ 480 (actual amount received) $ 1,125 (actual amount received) $ 2,375 (actual amount received) 2) Adam owns shares in Good Investments Limited, a Canadian-controlled private corporation. During 2020, the company paid dividends out of its capital dividend account. Adam received $ 2,300 of these dividends. 3) On January 2, 2020, Adam transferred his ownership of 1,000 shares of Denison Mines Inc., a taxable Canadian corporation, to his daughter Penelope, as birthday present for her sixteenth birthday. The original cost of these shares was $ 5,000. The Fair Market Value of these shares was $ 6,500 at the date of transfer to his daughter. Penelope received $500 (actual amount) in dividends from these shares during 2020 4) During 2019, Adam transferred a Hydro One bond to his wife, Barbara. Barbara received interest on this bond in the amount of $1,825 during 2020. Adam did not recognize any capital gain or loss in 2019 as a result of this transfer. 5) On June 1, 2019, Adam purchased a five-year Guaranteed Investment Certificate in the amount of $ 10,000 at an interest rate of 7.5%. 6) On September 1, 2020, Adam purchased a 90-day $15,000 Treasury Bill at a cost of $14,352 7) During 2020, Adam received dividends from IBM Corporation, a U.S. company. The actual amount of dividends received in 2020, net of withholding taxes of 15%, was $1,275. Assume that the average exchange rate for 2020 was $1.00 U.S. = $1.1420 Canadian. 8) Adam paid the following amounts in 2020: Accounting fees (not for preparation of his tax return) $ 300 Interest on funds borrowed to purchase investments 1,600 Interest on house mortgage 2,575 I Equired: a) Calculate Adam's NET INVESTMENT INCOME for 2020. Remember, capital gains are NOT considered investment income. b) Calculate the federal dividend tax credit, which Adam will be able to claim on his 2020 personal income tax return. C) Other than amounts included in investment income in your answer to part (a) indicate any additional tax implications for Adam as a result of the transfer of his shares to his daughter, as described in item (3). Question 4 (25 marks) The following information relates to the investment income earned by Mr. Adam Uppe for 2020: 1) Eligible dividends received from taxable Canadian corporations: DuPont of Canada Limited Bell Canada Limited Cott Corporation $ 480 (actual amount received) $ 1,125 (actual amount received) $ 2,375 (actual amount received) 2) Adam owns shares in Good Investments Limited, a Canadian-controlled private corporation. During 2020, the company paid dividends out of its capital dividend account. Adam received $2,300 of these dividends. 3) On January 2, 2020, Adam transferred his ownership of 1,000 shares of Denison Mines Inc., a taxable Canadian corporation, to his daughter Penelope, as birthday present for her sixteenth birthday. The original cost of these shares was $ 5,000. The Fair Market Value of these shares was $ 6,500 at the date of transfer to his daughter. Penelope received $500 (actual amount) in dividends from these shares during 2020 4) During 2019, Adam transferred a Hydro One bond to his wife, Barbara. Barbara received interest on this bond in the amount of $1,825 during 2020. Adam did not recognize any capital gain or loss in 2019 as a result of this transfer 5) On June 1, 2019, Adam purchased a five-year Guaranteed Investment Certificate in the amount of $10,000 at an interest rate of 7.5%. 6) On September 1, 2020, Adam purchased a 90-day, $15,000 Treasury Bill at a cost of $14,352. 7) During 2020, Adam received dividends from IBM Corporation, a U.S. company. The actual amount of dividends received in 2020, net of withholding taxes of 15%, was $1,275. Assume that the average exchange rate for 2020 was $1.00 U.S. = $1.1420 Canadian 8) Adam paid the following amounts in 2020: Accounting fees (not for preparation of his tax return) $ 300 Interest on funds borrowed to purchase investments 1,600 Interest on house mortgage 2,575 (continued next page) BTAX1 Alynn Boyle Required: a) Calculate Adam's NET INVESTMENT INCOME for 2020. Remember, capital gains are NOT considered investment income. b) Calculate the federal dividend tax credit, which Adam will be able to claim on his 2020 personal income tax return. c) Other than amounts included in investment income in your answer to part (a) indicate any additional tax implications for Adam as a result of the transfer of his shares to his daughter, as described in item (3)