Taxation Fundamental

Glory is a single mother, living with her son, Danie in Lava, Quebec. Danie is 21 years old, single and college student of full-time.

Glory has a part-time job, as the program assistant in local company. Her T4 slip in 2010 shows that withheld $321 in CPP and $146.00 in El. The company also withheld $1,850 in federal income tax and the same amount in provincial income tax.

Meanwhile, Glory challenges herself on e-commerce company on shopify to catch up e-commerce trend and tastes of young clients. The company is a sole proprietorship, registered in Montreal, Quebec.

Glory owns a nine-room bungalow (purchasing price of $280,000) where she and Danie live. The current value of the house is $300,000. One room in the home is used exclusively as an office for her e-commerce, and a portion of the basement is used for storage of inventory. The area in the property used for business purposes is 1/9 or 11.11%. Glory drives her car approximately two-third of the time for personal purposes, with cost of $20,000.

Glory also has one more property two bed room apartment - to rent out to community college students, with outstanding mortgage repayment status.

Glory also has income from the estate in Canada. The trust only invests interest-bearing investments.

Glory purchased a one-bedroom condominium in Atlanta initial cost $40,000 US and now worth $180,000 US) and Glory generally stays there from November 1 until April 30 each year.

She can easily operate her e-commerce on Shopify from Georgia. Glory does the business most of her work over the internet and telephone, although she also meets with some clients. The condominium serves as an office when Glory is in residence. When Glory is not staying at her condominium, she rent out at rate of 250 per week. In 2010, it was rented for 20 weeks.

Glory also has medical expenses herself, $2,000 per month for half of year. And it is not covered by private healthcare plan.

Her total income and expenses in 2010 were (expressed as Canadian dollars) in the following:

1. Employment income: $30,000
2. Gross business sales in Canada: $25,000
3. Gross business sales in US: $25,000
4. Estate income received: $35,000
5. Canadian dividend received: $20,000
6. Interest received: $3,500
7. Capital gain on sales of Equity Fund: 4,000
8. Dividends received (net of 15% withholding tax paid) from several US corporations: 3,400
9. Rental income received on a home rented out to college students: 700 per month
10. Rental income in US: $5,000

The two-bedroom to rent out nearby the college:

1)Mortgage payments made: 9,000

Interest: 6,600

Principal: 2,400

2) Property taxes: 2,500

3) Repairs:

New roof: 3,500

Paint: 200

New stove: 1,000

New furnace: 3,000

Insurance: 1,000

Glorys a nine-room bungalow:

1. Heat and utilities: 1,200
2. Home insurance: 400
3. Property taxes: 2,700
4. Internet service: 300

Business expenses:

1. Cost of goods sold: 6,000
2. Shipping fees: 2,000
3. Accounting professional fees: 1,500
4. Business insurance: 1,200
5. GST paid: 1,650
6. GST collected: 840
7. Furniture purchased: 4,000
8. Printing & office supplies: 2,000
9. Banking fees: 400
10. Telephone: 800
11. Client meetings (meals & coffee, etc.): 300

Total car expenses:

1. Gas: 1,750
2. Insurance: 1,000
3. Car payments (leased): 2,400
4. License plate renewal: 100

Condominium expenses in Atlanta:

1. Condominium fees: 3,000
2. Utilities: 1,600
3. Property taxes: 2,500
4. Telephone (business calls) long distance:1,000
5. Basic telephone: 300
6. Travel to client meetings: 500
7. Insurance: 1,000

Personal expenses:

1. Professional training tuition by BDC (e-commerce & AWS business solution): 500
2. Donations to the General Hospital: 500
3. RRSP contributions: 15,000
4. Danies university tuition fees (including cost of books and medical equipment of $7,000): $16,800

Danie has attended a university for 8 months and he has an earn income of $3,000 during her summer vacation. The employer withheld $0.00 CPP and $54.00 EI.

Danie also received $1,500 interest on Canada Savings Bonds that Glory gave him as startup savings.

With all assumptions above, please do the calculation of Glorys

1. taxable income
2. tax deduction, and
3. Basic Federal tax calculation.