Tania Selek, aged 49, moved to British Columbia in on 1st January 2020 because she has taken up a new job as an executive manager at a video game creation company. The moving costs were $8,200 and eligible to be used as deductions for tax purposes. Tania has rented an apartment for $3,700 a month for her family to live in. Tania’s base salary is $100,000 p.a. and 2020 was a good year for video games, so she was paid a $30,000 bonus. She contributes 10% of her base salary to her RRSP.

Tania has been a keen investor and bought several shares on the Toronto Stock Exchange over the past 4 years. She got paid $15,000 in eligible dividends 2020. She has made the following contributions to her TFSA as an index fund investment: $5,500 in 2017, $5,500 in 2018, $2,000 in 2019 and $2,500 in August 2020.

Tania currently has the following accounts:

Account	Market Value	2020 Earnings
TFSA - Index Funds	18,500	1,100
RRSP - Various Mutual Funds	162,300	15,200
Bank Account - High Interest Savings	10,500	200

Her stock market holdings are in a non-registered account. The portfolio is:

Holding	Book Value	Market Value
Telecom Common Shares	32,000	23,000
Electric Car Company Common Shares	21,800	55,200
Alternative Medicine Company Common Shares	45,000	55,000
Big Bank Common Shares	25,000	36,200
Big Rock Company Common Shares	15,000	18,000

Tania will sell her Electric Car Company shares next year as she wants to realise her profit before it goes down in price. She will gift this to her husband, so he can invest it in a GIC paying 2.5% with Little Bank Co.

Tania and her husband have 3 children. They all moved from Winnipeg for Tania’s work and her husband is currently caring for the children and looking for work. He is a registered schoolteacher. Tania’s children will turn 10, 12 and 18 in 2021. She wants to give them $6,000 each from the Big Rock Shares for their education in the future.

Overall, she is unsure about income attribution rules and is seeking your advice.

Required:

a) Explain to Tania the tax consequences of selling the electric car company shares and gifting the proceeds to her husband. Use calculations and ignore possible brokerage costs in this question. (10 Marks)

b) Provide Tania with tax advice regarding gifting the Big Rock Company shares to her children. (20 marks)

c) Provide Tania with four pieces of tax planning advice (other than those used in a) and b) questions) based on this case above. 

Answer rating: 100% (QA)

SOLUTION 1 Upon selling the electric car company Tania will realise a capital gain She is already in ... View the full answer