Ms. Henderson comes to you for advice in February 2024. Last year, 2023 was a year of considerable change and turmoil for her. Her job in Ottawa, with Losing Ltd., evaporated on March 31, 2023, as a result of a reorganization of the company's business after a merger with a competitor. She found another job in Dundas (an improvement), but it required her to move there. Her divorce from her former husband became final during 2022. Ms. Henderson, who was already a single parent of a nine-year-old daughter, decided to adopt a five-year-old child locally on May 1st of 2023. By June 2023, after completing her move to her new job, the adoption was finalized. The court costs, legal cost, and administrative costs were $18,000.

Other information on receipts and benefits:

Salary earned in 2023 ($44,000 in Ottawa, $50,000 in Dundas)

$94,000

Profit from sale of cosmetics at home parties held in spare time

5,850

Interest on saving accounts

1,800

Spousal support made pursuant to a court order ($700 per month for her support and $550 per month for the support of her daughter, age 9)

15,000

Moving allowance

7,500

Dividends received (eligible $3,500 and non-eligible $2,000)

5,500

Proceeds from disposal a work of art (original cost $800)

5,000

Disbursements and withholdings:

Employment Insurance premium withheld

$1,002

Canada Pension Plan contributions withheld

3,754

Union dues

500

Net rental loss (for tax purposes) on investment property

(4,800)

Registered retirement savings plan contributions, made on February 14, 2023 (2022 earned income was $127,000)

25,750

Registered education savings plan payments 2023 ($60 per month)

720

Tuition fees for 4 months part-time at a local University

3,800

Payment on cancellation of lease for Ottawa apartment

580

Security deposit on apartment in Dundas

475

Gasoline and direct car expenses incurred in move to Dundas

120

Trailer rental for move to Dundas

180

Cost of shipping remainder of household effects

2,600

Cost of hotel and meals in Dundas while awaiting delivery and unpacking of household effects (one day)

220

Payment to babysitter for care of both children after school and during school holidays

12,500

Medical expense paid for family dental care

5,800

Donations (registered political party $500 and registered charities $2,000)

2,500

A review of Ms. Hendersons 2022 tax return shows $5,000 net capital losses carried forward to 2023.

Required:

(Use tax rules applicable for 2023)

A. Calculate Ms. Hendersons net income for tax purposes and taxable income for the 2023 taxation year. Your must show all your calculations and explain any omitted items. Also, provide any further tax implications / advice on RRSP.

B. Regardless of what you calculated in Part A, assume that Ms. Hendersons net income for tax purposes and taxable income for 2023 was actually $108,000 and all other information is the same. Calculate Ms. Hendersons federal income tax for 2023.

Answer rating: 100% (QA)

A To calculate Ms Hendersons net income for tax purposes and taxable income for the 2023 taxation year we need to consider all the given receipts and ... View the full answer