On January 1, 2020, Ms. Bubkeh sold 400 shares of ABC Corp., a public Canadain corporation,...

   

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On January 1, 2020, Ms. Bubkeh sold 400 shares of ABC Corp., a public Canadain corporation, for $35 per share. Her trading history in these shares was as follows: March 3, 2009 - purchased 500 shares @ $26 per share September 3, 2010- - purchased 450 shares @ $31 per share July 7, 2012 - sold 500 shares @ $15 per share November 14, 2014 - purchased 550 shares @ $12 per share Ms. Bubkeh also sold 500 shares of ESBC Inc., an eligible small business corporation, for $20/share. She had originally purchased the shares for $45/share. Additional information: Ms. Bubkeh claimed a capital gains exemption of $5,000 in 2018 for the first time. Required: Calculate Ms. Bubkeh's net taxable capital gain she will report on her 2020 tax return for the above transactions. Furthermore, show any loss carryforwards she would have for the next year. Show all calculations. TAX APPENDIX 2020 2020 INDIVIDUAL FEDERAL INCOME TAX RATES $0 If taxable income is between and $48,535 $48,536 and $97,069 $97,070 and $150,473 $150,474 and $214,368 $214,369 and any amount The tax credits are 15% of the following amounts: Basic personal amount (if net income (NI) >= 33% tax bracket) Basic personal amount (if net income (NI) <= 29% tax bracket) Disability amount Supplement for children with disabilities Other amounts: $0 $7,280 $17,230 $31,115 $49,645 2020 SELECTED NON-REFUNDABLE TAX CREDITS INDEXED AMOUNTS PERMITTED TO INDIVIDUALS FOR PURPOSES OF COMPUTING FEDERAL INCOME TAX Adoption expenses credit limit Canada employment amount Pension Tax on base amount Spouse, common-law partner or eligible dependant amount (if NI >= 33% tax bracket) Spouse, common-law partner or eligible dependant amount (if NI <= 29% tax bracket) Net income threshold for Spouse, ... partner or eligible dependant amount Age amount if 65 or over in the year Net income threshold for Age amount Canada Caregiver amount (CCA) (children under age 18) Canada Caregiver amount (CCA) (infirm dependants age 18 or older) Net income threshold for Canada caregiver amount (CCA) CPP (Canada Pension Plan) EI (Employment Insurance) Annual Tax-Free Savings Account (TFSA) limit Medical expenses Federal Political contribution RRSP dollar limit Basic amount for GST credit Basic amount for OAS clawback Lifetime capital gains exemption on qualified small business corporation shares 6,000 2,397 27,230 Tax on excess 15% 20.5% 26% 29% 33% Dividends (Non-eligible / Eligible) Canada training credit minimum working income threshold / (max NI) $12,298 13,229 12,298 13,229 0 7,637 38,508 2,273 7,276 17,085 58,700/3,500/ (5.25%)/2,898 54,200 / (1.58%) / 856 38,507 79,054 CORPORATE FEDERAL INCOME TAX RATE 8,576 5,003 3/4 (400)/1/2 (750) / 1/3 (1,275) 15% / 38% + 10.38% / 20.73% 10,000 (147,667) 16,563 1,245 2,000 883,384 The tax payable by a corporation on its taxable income under Part I of the Income Tax Act is 38% before any additions and/or deductions. Class 1... Class 1... Class 1... Class 3. Class 8... Class 10.. Class 10.1. Class 12.. Class 13.. Year 2020 2019 2018 2017 years) Class 14.... Class 14.1. Class 17. Class 29. Class 39.. Class 43. TAX APPENDIX 2020 (continued) MAXIMUM CAPITAL COST ALLOWANCE RATES FOR SELECTED CLASSES Class 44.. Class 45.. Class 46. Class 50.. Class 52.. Class 53. Class 54, 55. - first 5,000 km - balance 4% 6% 10% 5% 20% 30% 30% 100% Maximum depreciable cost - Class 10.1 Maximum monthly deductible lease cost PST Jan. 1 Mar. 31 2 SELECTED PRESCRIBED AUTOMOBILE AMOUNTS 108 Original lease period plus one renewal period (minimum 5 years and maximum 40 2 .Length of life of property 5% For property acquired after December 31, 2016 8% Straight-line 50% 25% 30% 25% 45% 30% 55% Maximum monthly deductible interest cost $300 Operating cost benefit - employee 28¢ / 25¢ per kilometre of personal use Non-taxable car allowance benefit limits 1 For all buildings except those below used for non-residential activities used for manufacturing and processing activities 100% 50% 100% PRESCRIBED INTEREST RATES (base rates) $30,000+ GST + PST $800 GST + 59¢ per kilometre 53¢ per kilometre 2 2 1 Apr. 1 - June 30 July 1 - Sept. 30 Oct. 1 - Dec. 31 2 1 This is the rate used for taxable benefits for employees and shareholders, low-interest loans and other related-party transactions. 2 1 On January 1, 2020, Ms. Bubkeh sold 400 shares of ABC Corp., a public Canadain corporation, for $35 per share. Her trading history in these shares was as follows: March 3, 2009 - purchased 500 shares @ $26 per share September 3, 2010- - purchased 450 shares @ $31 per share July 7, 2012 - sold 500 shares @ $15 per share November 14, 2014 - purchased 550 shares @ $12 per share Ms. Bubkeh also sold 500 shares of ESBC Inc., an eligible small business corporation, for $20/share. She had originally purchased the shares for $45/share. Additional information: Ms. Bubkeh claimed a capital gains exemption of $5,000 in 2018 for the first time. Required: Calculate Ms. Bubkeh's net taxable capital gain she will report on her 2020 tax return for the above transactions. Furthermore, show any loss carryforwards she would have for the next year. Show all calculations. TAX APPENDIX 2020 2020 INDIVIDUAL FEDERAL INCOME TAX RATES $0 If taxable income is between and $48,535 $48,536 and $97,069 $97,070 and $150,473 $150,474 and $214,368 $214,369 and any amount The tax credits are 15% of the following amounts: Basic personal amount (if net income (NI) >= 33% tax bracket) Basic personal amount (if net income (NI) <= 29% tax bracket) Disability amount Supplement for children with disabilities Other amounts: $0 $7,280 $17,230 $31,115 $49,645 2020 SELECTED NON-REFUNDABLE TAX CREDITS INDEXED AMOUNTS PERMITTED TO INDIVIDUALS FOR PURPOSES OF COMPUTING FEDERAL INCOME TAX Adoption expenses credit limit Canada employment amount Pension Tax on base amount Spouse, common-law partner or eligible dependant amount (if NI >= 33% tax bracket) Spouse, common-law partner or eligible dependant amount (if NI <= 29% tax bracket) Net income threshold for Spouse, ... partner or eligible dependant amount Age amount if 65 or over in the year Net income threshold for Age amount Canada Caregiver amount (CCA) (children under age 18) Canada Caregiver amount (CCA) (infirm dependants age 18 or older) Net income threshold for Canada caregiver amount (CCA) CPP (Canada Pension Plan) EI (Employment Insurance) Annual Tax-Free Savings Account (TFSA) limit Medical expenses Federal Political contribution RRSP dollar limit Basic amount for GST credit Basic amount for OAS clawback Lifetime capital gains exemption on qualified small business corporation shares 6,000 2,397 27,230 Tax on excess 15% 20.5% 26% 29% 33% Dividends (Non-eligible / Eligible) Canada training credit minimum working income threshold / (max NI) $12,298 13,229 12,298 13,229 0 7,637 38,508 2,273 7,276 17,085 58,700/3,500/ (5.25%)/2,898 54,200 / (1.58%) / 856 38,507 79,054 CORPORATE FEDERAL INCOME TAX RATE 8,576 5,003 3/4 (400)/1/2 (750) / 1/3 (1,275) 15% / 38% + 10.38% / 20.73% 10,000 (147,667) 16,563 1,245 2,000 883,384 The tax payable by a corporation on its taxable income under Part I of the Income Tax Act is 38% before any additions and/or deductions. Class 1... Class 1... Class 1... Class 3. Class 8... Class 10.. Class 10.1. Class 12.. Class 13.. Year 2020 2019 2018 2017 years) Class 14.... Class 14.1. Class 17. Class 29. Class 39.. Class 43. TAX APPENDIX 2020 (continued) MAXIMUM CAPITAL COST ALLOWANCE RATES FOR SELECTED CLASSES Class 44.. Class 45.. Class 46. Class 50.. Class 52.. Class 53. Class 54, 55. - first 5,000 km - balance 4% 6% 10% 5% 20% 30% 30% 100% Maximum depreciable cost - Class 10.1 Maximum monthly deductible lease cost PST Jan. 1 Mar. 31 2 SELECTED PRESCRIBED AUTOMOBILE AMOUNTS 108 Original lease period plus one renewal period (minimum 5 years and maximum 40 2 .Length of life of property 5% For property acquired after December 31, 2016 8% Straight-line 50% 25% 30% 25% 45% 30% 55% Maximum monthly deductible interest cost $300 Operating cost benefit - employee 28¢ / 25¢ per kilometre of personal use Non-taxable car allowance benefit limits 1 For all buildings except those below used for non-residential activities used for manufacturing and processing activities 100% 50% 100% PRESCRIBED INTEREST RATES (base rates) $30,000+ GST + PST $800 GST + 59¢ per kilometre 53¢ per kilometre 2 2 1 Apr. 1 - June 30 July 1 - Sept. 30 Oct. 1 - Dec. 31 2 1 This is the rate used for taxable benefits for employees and shareholders, low-interest loans and other related-party transactions. 2 1

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Calculation ABC Corp shares Purchase costs 500 x 26 450 x 31 550 x 12 25300 Sale proceeds 400 x 35 1... View the full answer