Trent Zalinski recently retired as a football player with the Saskatchewan Roughriders. In the current year, he received his salary of $150,000 from the team and is eligible for a CFL pension in 15 years. He and his wife Mary have settled in Weyburn, Saskatchewan, where he runs a small sporting goods store as a proprietorship. He has provided you with the following additional information.
(a) His net income from the store for the fiscal year ended December 31 was $35,000. Next year he is hoping to double that. Mary works in the store about 35 hours a week and is paid $6 per hour. This is already included as an expense in determining the $35,000.
(b) Trent's other current-year receipts are: fees received from endorsement of a brand of football equipment, $30,000; eligible dividends from Canadian public corporations, $7,200; dividends from foreign public corporations, (net of $750 withholding tax) $6,750; interest from Canadian bank, $3,000.
(c) Trent also had the following expenses: safety deposit box fees, $50; cycling trip to Cypress Hills Provincial Park with family, $2,200; interest on bank loan to acquire public company shares, $4,000.
(d) In May of the previous year, Trent purchased a five-year GIC in Mary's name. The interest rate was 6%, and it was for $10,000. None of the interest is receivable until maturity in five years.
REQUIRED
(a) Determine Trent's net income for tax purposes.
(b) Do you have any basic tax planning advice for Trent?