Taxation 1 final test

Mr. Harris has a salary of 125,000

Federal tax         36000

CPP                        1500

EI                     900

Canada pensionable income    1000

Outstanding fees of CPA/CGA     750

RPP contributed 5000

Company provide Company provide Automobile cost 150,000 operating cost 25000. Mr. Harris went to the Spain for 2 months and he gave that car back to the company office. He total drove 52,000 km and personal 8000. He reimbursed company to the 1000.

Company provide him a 1000 share at the price of $25 in 2015. He sold those share in October 2016 at the price 125.

Contributed to his own RRSP 20000. At the end of the year 10000 unused amount carry in the year 2016. He earned 105,000 under RRSP. His pension from RRSP was 15,000.

Sell 4000 TD bank shares at $60. And paid 1% commission to the broker.

Sale, December 2015       1000 shares at the price of $60

Purchase March 2013       3000 shares at the price of 35

Sales, December 2012       1000 shares at the price of 30

Purchase March 2008        5000   shares at the price of 17

Purchase April    2007        1000 shares at the price of 35

TD paid the dividend $3.025/per share

He sold his house and come near 50 km to his work. Hotel expense for 30 days 1000. Meal expense 2250. He paid 50,000 commission to the broker. Home inspection cost 15,000.

He provide the following information to the disposition of assets.

                                                             Cost          proceeds      cost of selling

Home                                                  350000     320000           5000

Garden equipment                          5000          3500                 -

Clock                                                   5000          7000               100

His wife name is Barbara her net income of the year 42000.

10. The entire family is healthy except for John who is legally blind since birth. John is a full time university student for 8 months of the year and does not work but received social assistance payments of $11,800 in 2016 from the provincial government. Mr. Harris paid for John’s tuition of $7000 for 2016 and in return, John agreed to transfer him the maximum tax credit possible.

11. Mr. Harris paid for the following medical expenses in 2016:

Prescription drugs for Mr. Harris                             3465

Medical specialists for John                                       10490

Prescription glasses for Barbara                                 875

Liposuction for Mr. Harris                                        2463

Dentist for John                                                        3300

Dentist for Barbara                                                    1325

Required:

Calculate the maximum RRSP deduction Mr. Harris can take for 2016 and determine whether the RRSP contributions made during 2016 result in any penalties.

Calculate Mr. Harris Net Income for tax purposes using the ITA 3 rules and format the year 2016.

Calculate Mr. Harris minimum Taxable Income for the year 2016.

Calculate Mr. Harris MINIMUM Net Federal tax payable (or refund) for the year 2016. Ignore any provincial tax and credits.

Explain your answer, included detailed calculations and provide items that you have not included in your calculations. Ignore the considerations. Assume all applicable elections were made and certificates are filled with CRA. You can use the following information for 2016 to calculate Federal Tax payable:

Taxable income                            Federal Part I tax                                            Marginal Rate

In access of                                                                                                                   on excess

         0                                                              0                                                                     15%

   45282                                                     6792                                                             20.5%

   90563                                                   16075                                                               26.0%

   140388                                                 29029                                                              29.0%

   200000                                                46317                                                               33.0%