Edward White is 45 years old. He has been married to Eva White for 20 years. During 2020, Eva has Net Income For Tax Purposes of $6,400, all from investments. During 2020, Edward works 237 hours for Search & Rescue in his local community. He did not receive any compensation for this work. After many years of renting, on May 1, 2020, Edward and Eva purchase a new residence for $290,000. They get a $250,000 mortgage at 3.5 percent per annum to finance the purchase. Edward and Eva’s only surviving parent is her mother, Gina. She is 76 years old and, while she is dependent on Edward and Eva because of a physical infirmity requiring the use of a wheelchair, her condition is not severe enough for her to qualify for the disability tax credit. Her 2020 Net Income For Tax Purposes is equal to $11,100. This includes OAS payments for all twelve months in 2020 and a small pension from a former employer. During 2020, Edward spent $14,000 modifying their new home to accommodate Gina’s wheelchair. 

The work was enduring in nature and will allow Gina to be much more mobile within the home. During 2020 Edward paid the following: Root canal fee to dentist for Edward $1,800 Hair replacement fees for Edward 6,500 Prescription glasses and contact lenses for Eva 950 Teeth whitening fees for Eva 1,500 Psychologist consulting fees for Eva 3,200 Electric wheelchair for Gina 3,500 Physiotherapy fees for Gina 2,850 Employment Information Edward works for a large Canadian public company. His salary is $99,350, none of which involves commissions. His employer withholds the following amounts during 2020: Registered Pension Plan Contributions (Note 1) $4,500 EI Premiums 856 CPP Contributions 2,732 Federal Income Tax Withholdings 26,000 Contributions To The Canadian Alzheimer’s Society (Note 2) 3,200 Note 1 Edward’s employer makes a matching contribution of $4,500. Note 2 The Canadian Alzheimer’s Society is a registered Canadian charity. 2 Edward is required to travel extensively for his employer. He uses his own automobile for this travel. His current automobile was acquired on January 1, 2020 at a cost of $48,000. During 2020, the automobile is driven 38,000 kilometers, 29,700 of which were employment related. Operating costs for the year totaled $12,700. At the time he purchased this automobile, his employer provided him with an interest free loan of $24,000 to assist him with the car purchase. None of this loan will be repaid until 2021. Assume that the relevant prescribed rate of interest throughout 2020 was 2 percent. In addition to his automobile costs, his other 2020 travel costs were as follows: Hotels $3,100 Food while travelling for employer 2,100 His employer provides him with the following allowances for his travel: Hotels and food $5,000 Use of personal automobile ($100 Per Week) 5,200 Sole Proprietorship Edward has spent many years carving birds and horses out of beach wood. He would sometimes sell the odd piece to tourists who passed through the area in the summer. Demand for his work increased drastically over the last two years and Edward has decided to make his hobby into an official business as of January 1, 2020. He spends many evenings and weekends working on his carvings and sells them to tourists and some local residents over the summer months. In 2020, Edward’s carving sales amounted to $5,255. There was no cost for the wood, as he scavenged it off the beach. 

Other supplies such as wire, paint, and small tools cost him $489. In 2020, he built a shed on his property to work in and to display his carvings. The shed cost $10,000 to build and finish. The shed is expected to have a useful life of twenty years and will have no resale value at the end. Utilities for the shed were $1,245 for the year. Insurance cost $350 for the year. Edward is not currently required to charge GST on his sales as his annual gross revenue is less than $30,000, therefore, he decided not to become a GST registrant yet. Investment Information Early in 2020, Edward’s father died of cancer and left him a large inheritance, which Edward invested to create a substantial investment portfolio. Edward paid off his mortgage on October 31, 2020 with funds from his inheritance. On November 1, 2020, he used his house as collateral for a new $250,000 mortgage with an annual interest rate of 3 percent. He immediately invested the funds in shares of Canadian public companies. The 2020 results for his investments are as follows: Canadian Public Companies: During the year he receives $18,000 in eligible dividends from his holdings of Canadian public companies. Canadian Controlled Private Company: He has invested in a local company founded by a close friend that has developed a revolutionary new product. As the product is becoming successful, the Company pays Christopher non-eligible dividends of $12,000 during the year. Foreign Preferred Shares: 

In 2020 he purchased US $20,000 in preferred shares of U.S. based public companies. At the time he purchased these shares, the exchange rate was US $1.00 = C$1.35. During 2020, these shares pay dividends of US $1,400. Ten percent of this amount was withheld by U.S. tax authorities. 

The average exchange rate for 2020 was US$1.00 = C$1.30. 3 Mutual Fund Trusts: During the year, Edward’s holdings of mutual fund trusts distribute a total of $42,350. 

The breakdown of these distributions is as follows: Capital Gains $20,000 Eligible Dividends 16,000 Interest Income 6,350 Total $42,350 Required: Ignore GST/HST/PST considerations in your solution. Determine the following amounts for Edward for 2020: 

A. Net Employment Income 

B. Net Business Income (Loss) 

C. Net Property Income 

D. Net Income For Tax Purposes 

E. Taxable Income 

F. Federal Tax Payable 

G. Net Tax Payable 

H. Net Tax Owing (Recoverable)

Answer rating: 100% (QA)

A Net Employment Income 99350 B Net Business Income 2366 C Net Property Income 0 D Net Income For ... View the full answer