Ms. Sui is an executive of a large public retail corporation, Clothes to You Ltd., situated in Dundas, Ontario. Ms. Sui is not married. However, she has two adopted children, ages 8 and 10, who reside with her.
Ms. Sui has provided you with the following information for 2012: Clothes To You Ltd.:
Gross salary $150,000
Commission income 30,000
Canada Pension Plan contributions (2,307)
Employment Insurance premiums (840)
Registered pension plan contributions (money purchase) (6,000)
Income taxes deducted (55,000)
(1) Clothes To You Ltd. provides Ms. Sui with an automobile. The annual lease cost of the car, including HST, is $18,400. Ms. Sui is reimbursed for her operating expenses when using the car for business. Clothes To You Ltd. also pays for any insurance, license fees and repairs and maintenance related to the operation of the automobile. The operating expenses for the year totaled $6,200, including HST. She used the car 10,000 kilometers for pleasure and 30,000 kilometers for business. She is charged $200/month for the use of the car and operating costs.
(2) Ms. Sui received stock options in the year. She has the option to purchase 20,000 shares at $3.50/share. The value of the shares at the date of the issue of the option was $3.50/share. Ms. Sui has not yet exercised any of her options.
(3) Ms. Sui received a piece of artwork worth $750, including HST, from the company at Christmas time.
(4) Clothes To You Ltd. paid $1,300, including HST, for her membership in a fitness club. The corporation also paid Private Health Insurance premiums of $350.
Investment Receipts:
Interest income$1,100
Dividends received from Canadian-resident public corporations7,500
Dividends from U.S. corporation - net of 15% withholding tax (in Cdn. $)680
Other Items:
(1) Annuity payments under contract from Profound Life Assurance Co.
The capital portion of the annuity was $650 $2,000
(2) Net proceeds on the sale of her house on March 15, 2012 -
Net of real estate commission of $12,000 $188,000
The house cost $90,000 in 1999. She had previously sold her pre-1971 cottage in 2001, giving the cottage the maximum designation as a principal residence in order to have a nil taxable capital gain.
(3) At Christmas 2011, Ms. Sui gave each of her children a 6%, $2,000 five-year bond.
Expenditures/Losses:
(1) Investment counsellor's fees$ 1,100
(2) Interest on bank loan to purchase shares850
(3) Registered retirement savings plan contribution14,000
Ms. Sui's earned income in 2011 was $170,000. The PA on her 2011 T4 was $7,000.
(4) Ms. Sui incurred meals and entertainment expenses8,300
(5) Rental loss (before CCA)3,500
(6) Ms. Sui invested in a limited partnership tax shelter in 2012. The loss per form T5013 is $3,200. She invested $5,000 in the partnership units in early 2012.
REQUIRED
Calculate Ms. Sui's income under Division B for 2012, using the ordering rules in section 3.