Personal Financial Planning1

FIN 4013

Assignment #3 – Group # 7

Part 1
Sandra was born on July 3, 1986, is single, and works as a manager for a manufacturing company
in Ontario. The following is contained on Sandra’s 2018 T4 slip from her employer:
Employment income $81,000
Employment Insurance premium 955
Canada Pension Plan contribution 2,544
Registered Pension Plan contribution 6,100
Income Tax paid (deducted by employer) 17,400

On November 14, 2018, Sandra contributed $6,000 to her RRSP and received a receipt for income
tax purposes. In late 2016, Sandra purchased $51,000 worth of Canadian Tire shares which she
financed with an investment loan that charged her $1,100 in interest during 2018. During 2018, she
received $1,600 in dividends from her shares. Late in 2018, Sandra sold all of her Canadian Tire
shares for proceeds of $66,000. She also received $300 in interest income from her savings amount
of $25,000 in her financial institution.

Prepare Sandra’s 2018 federal income tax return by using the following steps:

Step 1: Calculate Total Income

Step 2: Calculate Net Income by subtracting deductions
Step 3: Calculate Taxable Income (same as Net Income)
Step 4: Calculate Net Federal Tax Payable
Step 6: Calculate applicable (non-refundable) Tax credits
Step 7: Calculate Tax owed or Refund

Make sure to identify all items in all the steps when conducting the above and show all your calculation
including formulas used in each cell as applicable. Use separate areas of the same worksheet for steps addressed
above and show calculations done for specific items such as dividend amount, taxable capital gain, non-
refundable tax credit calculation etc. Use the sample solution format provided by your Instructor.

Each calculation step carries 1 mark.

Part 2

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 Personal Financial Planning1
FIN 4013

You are a loan officer working at Syfield Mortgage Corp. A client, named Sara Wilson, has come
to you to see if she how much she is qualified for a mortgage loan After sitting down with her, you
came to know the following information about her financial situation:

Sara’s yearly salary is: $101,800 per year

Sara wants to make a 10% down-payment.

Based on your experience as well as speaking with her, you came to know about the following
information about the property she is looking at:

Property tax: $3,300 / year

Heating bill: $250 / month

She also has the following liabilities:

Car loan payment: $450 / month
Credit card payment: $225 / month

Currently typical mortgage rate is 4.5%. Sara is looking to pay-off the mortgage early and wants
payment to be based on a 15 years amortization.

a) What is the maximum loan she can qualify for based on GDSR and TDSR?
b) What is the estimated value of the house she can purchase (ignore any closing cost)

Instructions for completing Assignment

Use MS Excel. Use multiple worksheets for each part and identify (name) the worksheets.

Each calculation step carries 1 mark.

COPYRIGHT ©2016. LAMBTON COLLEGE IN TORONTO