NET INCOME

3(a) Income from an office and employment

Salary and wages
Taxable benefits

Deductions allowed
Dues and other - Professional association
expenses of
performing duties

Employee’s registered pension

plan (RPP) contributions

Income from a business

Net income per Financial Statements (F/S)
Add: Depreciation and amortization
Non-deductible club dues (golf club)
Non-deductible meals and entertainment expenses (50% x $700)
Charitable donations (tax credit in Tax Payable)
Recapture

Deduct: Capital cost allowances claimed

Terminal Loss

Income from property

Interest
Non-eligible Dividends 2,000x(1+15%)
Eligible Dividends 20,000x(1+38%)
Rental income
Royalty

Other sources of income

Pension, RESP, scholarship ($0)

3(b) Taxable capital gains (other than LPP) - Note 7

Net taxable capital gains on listed personal property (LPP)
- LPP Taxable capital gains - Note 8
- Less: LPP Allowable capital losses
- Less: Net capital loss on LPP carry-over (1,850)

Less: Allowable capital losses (other than ABILs) - N (500)

Net Taxable Capital Gains

3(c) Other deductions

RRSP Contribution-Note 3
 Moving expense >40KM
CPP on business income
RESP Contribution - Note 4 No deduction

3(d) Losses from an office and employment

Losses from a business
Losses from property
Farm loss
Lesser of : 50,000
- (First 2,500 + (½ excess of 30,000)) = max: 17,500
(no new restricted farm loss added in 20X1)
=2500+0.5*(2000-2500)
Added restricted farm loss

Allowable business investment losses (ABIL) - Note 10

NET INCOME

TAXABLE INCOME
NET INCOME

Loss carryovers
- Non capital loss carry-over
- Net capital loss (other than LPP) carry-over
- Restricted farm loss
TAXABLE INCOME

TAX PAYABLE
Taxable income
Income tax according to the tax table (depending on taxable income)
15% X 12,200
Basic personal amount everyone
Married - Domino (income of $50,000 exceeds the threshold, $0 credit)
Equivalent-to-spouse - Son, aged 10 don't have spouse,widow,divorce,kid
CPP on income from employment-maximum 60000*5.1%
EI on income from employment-maximum 60000x1.62%
Canada Employment credit lesser of 60,000 and 1,222
Medical expense credit $400 - (lesser of : $2,352 and 3% NI)=400-1813=0
Children’s fitness (hockey activities and equipment) credit $600+$640 (tax credit cancelled
in 2017)
 Public transit passes credit $1,200 (tax credit cancelled in 2017)

Credits x 15%

Charitable donations ($400)

=200x15%+200x29%

Non-eligible dividend tax credit

(10.38% x 2,000)
Eligible dividend tax credit
(20.73% x 20,000)

Net Federal Tax

Provincial tax
Total Federal and Provincial Tax

Less: Tax withheld at source

Tax Refund

Note:
1) RPP contributions - employer payment $7,777 = Not a benefit (ITA6(1)(a)) (#2)
2) political contributions and charitable donations made in recent years will not be included in tax payable calculatio
3) RRSP Contribution:
Prior year unused room
+ Lessor of
Current year dolloar limit 26,500
Int+Div? Previous year 18% earned income 11,340
- Prior year adjustment
Current year deduction limit

Current year deduction, lessor of

Current year contribution 14,000
Current year deduction limit 8,780
Unused room at end of 20x1
4) $2,050 for contribution in a Registered education savings plan for his child is not tax deductible
5) $700 for Keith's registration in a gentleman soccer league is not a tax credit.
6) $660 for registration in dance class activities for his child is not a tax credit.
7) Taxable capital gain :
Shares Proceeds of disposition 16,000
Adjusted cost base (10,000)
6,000
3,000
8) Taxable capital gains on LPP
Coins Proceeds of disposition 4,000
collection Adjusted cost base (1,000)
3,000
 1,500
9) Allowable capital losses
Ski Proceeds of disposition 100
Adjusted cost base (1,100)
-

10) Allowable business investment losses

Proceeds of disposition -
Adjusted cost base (50,000)
(50,000)
(25,000)
11) Losses carry over
Net capital loss on LPP Net capital loss (other than LPP)
Loss carryover from 20X0 2,200 11,200
Added during the year 20X1 - 500
Used during the year 20X1 (1,500) (11,200)
Loss carryover for next year 700 500

Less: Allowable capital losses (other than ABILs) - Note 9 -

60,000 Note A- Income from Employment
- 5 Salary and wages
Gross salary
6 Taxable benefits
(1,400) 6(1)(a) Exclude RPP contribution not taxable
7 Stock option
8

(6,600) 52,000

25,000 Note B- Income from a business

2,250
250
350
400 3,250 Business - taxable income. Individual-tax payable tax credit

28,250

(3,350) (3,350)
24,900 24,900

3,440
2,300
27,600 33,340

-
110,240

3,000

1,500
-
(1,500) -
3,000

- - 3,000

CPP Deduction on inc from a busi

(8,780)
 (1,520)
-
- (10,300)

Earning s subject to contribution(max 201

(If salary is higher than 53,900, no CPP on
-
-

(17,500)

(25,000) (42,500)
60,440

60,440

(3,200)
3(b)limit (3,000) (11,200)
-
54,240

54,240

8,500 1,830
12,069
-
- if make more than 12069, no ETS credit
2,749
860
1,222
-

-
 -
16,900
(2,535)

(88)

(208)

(4,146)

1,523
2,375
3,898

(12,000)
(8,102)

included in tax payable calculations as they were not made in the current year (#7)

4,440

11,340
(7,000)
8,780

(8,780)
-
tax deductible
(#12)
(#12)

CG
TCG

(300) minimum rule

CG
TCG

(1,000) no loss on PUP

(500)

CL
ACL

Non-capital loss Restricted farm loss

3,200 -
-
(3,200) -
- -

-
 60,000

idual-tax payable tax credit

ction on inc from a busi

60,000
24,900
 (3,500)

81,400

subject to contribution(max 2019=53,900) 53,900

s higher than 53,900, no CPP on busi income)
TAX PAYABLE BY A CORPORATION

3(a) Business Income $ 750,000

Property Income
Interest 60,000
Investment Dividend 20,000 80,000 830,000

3(b) Taxable Capital Gain 50,000

100,000/2
Less: Allowable capital losses (other than ABILs) (15,000)
(40,000-10,000)/2
Net Taxable Capital Gains 35,000

3(c) Other deductions -

3(d) Losses from property (10,000)

Allowable business investment losses (ABIL) - Note 10 (5,000)
10,000/2

NIFTP 850,000

TAXABLE INCOME
NET INCOME 850,000
Div C
Dividends (20,000)
Charitable gifts carryforward (25,000)
Loss carryovers
- Non capital loss carry-over (40,000)
- Net capital loss (other than LPP) carry-over (15,000) up to 35K NTCG

TAXABLE INCOME 750,000

Federal Tax Payable

Basic Rate 750,000x38% 285,000
Federal tax abatement for provincial tax 750,000x10% (75,000)
Small business deduction (19% of $500,000) (95,000)
19% of the lesser of:
active business income $750,000
taxable income $750,000
annual business limit $500,000 shared with associated Corp spouse
Manufacturing and processing profits deduction -
General tax reduction-Note 1 24,050 (24,050)
Refundable tax on CCPC's investment income 6,933
Federal Income Tax Payable 139,050

Refundable tax on CCPC

ALL 65,000
Taxable Inc

Note:
1) General tax reduction-Note 1
Taxable income 750,000
Ms: Manufacturing and Processing deduction -
Ms: Personal service business income -
Ms: SBD base = Lesser of : SBD A, B, C (500,000)
Ms: Aggregate investment income
+NTCG-Net Capital Loss Carryover+Interest Income (65,000) (80,000)
=35,000-15,000+60,000=80,000
185,000
x13%
General tax reduction for CCPC 24,050

3) The corporation’s inventory had a cost of $500,000 and a fair market value of $800,000?
up to 35K NTCG

Nore A Analysis of Net Income

3(a) Business Income $ 270,000
Property Income
Interest -
Dividend 5,000 5,000 275,000

3(b) Taxable Capital Gain -

Net Taxable Capital Gains -

3(c) Other deductions -

3(d) Losses -
Net Income for Tax Purposes 275,000

TAXABLE INCOME
NET INCOME 275,000

Dividends (5,000)
Loss carryovers
- Non capital loss carry-over (60,000)
- Net capital loss (other than LPP) carry-over - (30,000)
TAXABLE INCOME 210,000

Federal Tax Payable

Basic Rate 180,000x38% 79,800
Federal tax abatement for provincial tax 180,000x10% (21,000)
Small business deduction (19% of $210,000) (39,900)
19% of the lesser of:
active business income $270,000
taxable income $210,000
annual business limit $500,000
Manufacturing and processing profits deduction -
General tax reduction-Note 1 -
Total Federal Tax - Part I 18,900

Additional Refundable Tax (ART) add to RDTOH Refundable portion Part 1 tax 20% of Canadian I
Lessor of: -
Aggregate investment income -
Taxable income - Small business deduction base
180,000-180,000 -

Part IV Tax Temporary tax to pay add to RDTOH If pay dividend, has RDTOH balance, w
Portfolio Dividend 1,917
5,000x38 1/3%

Total Part IV Tax 1,917

TOTAL FEDERAL TAX 20,817
Provicial Tax (180,000x5%) 9,000
Total Tax Payable 29,817
Tax paid by instalments (25,000)
BALANCE PAYABLE 4,817

RDTOH Balance
Beginning balance 1,000
Less: Prior year dividend refund -
Add: Refundable Part I Tax -
(Lessor of AII and Taxable Income - SBD)
Add: Refundable Part IV Tax 1,917
Ending balance 2,917

Note:
1) General tax reduction-Note 1
Taxable income 210,000
Ms: Manufacturing and Processing deduction -
Ms: Personal service business income -
Ms: SBD base = Lesser of : SBD A, B, C (180,000)
Ms: Aggregate investment income
+NTCG-Net Capital Loss Carryover+Interest Income -
=0-30,000+0 30,000
x13%
General tax reduction for CCPC -

2) Touin's salary of $70,000 should be deducted from the active business income so no adjustment is required.
Part 1 tax 20% of Canadian Investment Inc. add to RDTOH

idend, has RDTOH balance, will get dividend refund - cash Pay 2.8 dollar dividend, get $1 div refund
justment is required.