1. Charlotte's salary to June 30 was $70,000. From this, Roadhouse deducted EI and CPP of...

      

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1. Charlotte's salary to June 30 was $70,000. From this, Roadhouse deducted EI and CPP of $4,453 (includes CPP enhanced contributions of $461), income tax of $13,000, and $400 for Charlotte's portion of the private group medical insurance premium. An additional premium of $400 was paid by Roadhouse. Also, Roadhouse paid the $800 premium for Charlotte's group term life insurance coverage of $100,000. 2. On June 30, Charlotte returned the company car that Roadhouse had provided her. The car cost $32,000, and Roadhouse's undepreciated balance was $18,000. Roadhouse also paid the operating costs for the car, which amounted to $2,100. Charlotte drove her car 16,000 km, of which 12,000 km were for business use. 3. Charlotte travelled by air when working for Roadhouse. Charlotte used her personal credit card and accumulated frequent flyer points. She was reimbursed by Roadhouse for travel costs. In March, she and her partner used some of her accumulated frequent- flyer points to obtain free airline tickets for a vacation. As a result, they each saved the $800 airfare. 4. In 2020, Charlotte borrowed $60,000 from Roadhouse. She paid interest at 1% on the loan. Charlotte used the borrowed funds for the down payment to purchase a rental property. Charlotte repaid the loan on June 30 when her employment ended. [Assume CFA prescribed interest rate was 3% throughout 2022]. 5. On June 30, Charlotte sold 500 shares of Roadhouse Ltd. for $20 per share to the company's controlling shareholder. Roadhouse issued the shares to Charlotte at $10 in 2019. At that time, the shares were appraised at $12. Roadhouse Ltd. is a Canadian- controlled private corporation. At the time of the share sale, all of Roadhouse's assets were being used in an active business. 6. Charlotte began practising law from her home office on July 1 and registered for HST. She purchased the client list and files of a retiring lawyer for $50,000. She also purchased a computer for $4,000 and a legal library for $5,600. 7. On July 4, Charlotte purchased an automobile for $64,000 plus HST. She used the car 60% of the time for her law practice. 8. For the six months ended December 31, 2022, the financial statements of Charlotte's law practice showed a profit of $164,000. The gross revenue of $194,000 consisted of the following: Fees billed and received Fees billed but not received at year-end $170,000 24,000 pinion retiring lawyer for $50,000. She also purchased a computer for $4,000 and a 7. On July 4, Charlotte purchased an automobile for $64,000 plus HST. She used the car 60% of the time for her law practice. 8. For the six months ended December 31, 2022, the financial statements of Charlotte's law practice showed a profit of $164,000. The gross revenue of $194,000 consisted of the following: Fees billed and received. Fees billed but not received at year-end 9. Operating expenses for the law practice included the following: Liability insurance Depreciation and amortization Reserve for bad debts Golf club dues: while attending the club, clients are entertained approximately 30% of the time Charitable donations i Promotion: client lunches i Secretarial services. Computer software: word processing and billing program $170,000 24,000 $194,000 Insurance Mortgage interest $ 10. Charlotte uses 12 square metres of her house exclusively as an office for her law practice. Expenses for the entire 80-square-metre home for all of 2022 consist of the following: $ 2,200 9.100 700 9,000 3.200 1,200 1,600 1,800 400 12,000 900 Depreciation and amortization Reserve for bad debts Golf club dues: while attending the club, clients are entertained approximately 30% of the time Charitable donations Promotion: client lunches Secretarial services Computer software: word processing and billing program arlotte uses 12 square metres of her house exclusively as an office for her law practice. Expenses for the entire 80-square-metre ne for all of 2022 consist of the following: Insurance. Mortgage interest Property taxes Utilities The financial statements do not include the home office costs. 9,100 1,200 1,600 1,800 400 12,000 900 $ 700 9,000 2,300 3,000 $15,000 Charlotte owns a residential rental property, which she had purchased in 2020. Details of the rent and expenses in 2022 are as follows: Rental Repairs and maintenance $ 1.200 Property tax 900 Interest on first mortgage 3,300 (5.400) $ 600 $6.000 As of December 31, there were no unpaid rents from the tenant. 2. Charlotte contributed $11,000 to her RRSP and another $1,000 to a spousal RRSP during the year. She has contributed the same amount to the spousal plan for the past four years. On December 20, her spouse withdrew $4,000 from this spousal account. 3. The following additional receipts and disbursements occurred during the year: Paid dental fees Paid contributions to a registered federal political party Paid interest on late payment of 2021 income tax Received cash dividends (non-eligible) on Roadhouse shares Received proceeds from the sale of a silver tea set (original cost: $1,600) $2,900 1,400 240 1,000 1,100 4. Charlotte received 100 shares of TXE Ltd., a public corporation. The shares were a stock dividend (eligible) on the 2,000 shares she had purchased at $4 per share five years ago. At the time of the stock dividend, the shares were trading at $8. She sold the 100 stock dividend shares in December, at $7. 5 Charlotte's spouse earned $110,000 in 2022. 2020 tax return. Her employer willingly gave her the time off from work to attend the convention even though it was not directly related to her work. In 2022, Charlotte received a reassessment notice from the CRA disallowing the entire convention expense deduction. Now that Charlotte is practising law, she will attend the 2023 convention to upgrade her skills. 7. A review of Charlotte's 2021 tax return shows the following: Maximum RRSP deduction available in 2022 Capital gains deductions claimed in past years Net income from real estate rentals (after deducting a reserve for uncollectible rents of $500) Undepreciated capital cost: Class 1 (rental property) Reserve for unpaid rents $ 10,500 75,000 860 52.000 500 Pas 413 5) C) the Income Tax Act Based on your answer to part (a), calculate Charlotte's federal income tax for the 2022 taxation year. Why did the CRA deny the deduction of Charlotte's 2020 convention expenses? Can she obtain a deduction for the proposed 2023 convention? If so, why? 1. Charlotte's salary to June 30 was $70,000. From this, Roadhouse deducted EI and CPP of $4,453 (includes CPP enhanced contributions of $461), income tax of $13,000, and $400 for Charlotte's portion of the private group medical insurance premium. An additional premium of $400 was paid by Roadhouse. Also, Roadhouse paid the $800 premium for Charlotte's group term life insurance coverage of $100,000. 2. On June 30, Charlotte returned the company car that Roadhouse had provided her. The car cost $32,000, and Roadhouse's undepreciated balance was $18,000. Roadhouse also paid the operating costs for the car, which amounted to $2,100. Charlotte drove her car 16,000 km, of which 12,000 km were for business use. 3. Charlotte travelled by air when working for Roadhouse. Charlotte used her personal credit card and accumulated frequent flyer points. She was reimbursed by Roadhouse for travel costs. In March, she and her partner used some of her accumulated frequent- flyer points to obtain free airline tickets for a vacation. As a result, they each saved the $800 airfare. 4. In 2020, Charlotte borrowed $60,000 from Roadhouse. She paid interest at 1% on the loan. Charlotte used the borrowed funds for the down payment to purchase a rental property. Charlotte repaid the loan on June 30 when her employment ended. [Assume CFA prescribed interest rate was 3% throughout 2022]. 5. On June 30, Charlotte sold 500 shares of Roadhouse Ltd. for $20 per share to the company's controlling shareholder. Roadhouse issued the shares to Charlotte at $10 in 2019. At that time, the shares were appraised at $12. Roadhouse Ltd. is a Canadian- controlled private corporation. At the time of the share sale, all of Roadhouse's assets were being used in an active business. 6. Charlotte began practising law from her home office on July 1 and registered for HST. She purchased the client list and files of a retiring lawyer for $50,000. She also purchased a computer for $4,000 and a legal library for $5,600. 7. On July 4, Charlotte purchased an automobile for $64,000 plus HST. She used the car 60% of the time for her law practice. 8. For the six months ended December 31, 2022, the financial statements of Charlotte's law practice showed a profit of $164,000. The gross revenue of $194,000 consisted of the following: Fees billed and received Fees billed but not received at year-end $170,000 24,000 pinion retiring lawyer for $50,000. She also purchased a computer for $4,000 and a 7. On July 4, Charlotte purchased an automobile for $64,000 plus HST. She used the car 60% of the time for her law practice. 8. For the six months ended December 31, 2022, the financial statements of Charlotte's law practice showed a profit of $164,000. The gross revenue of $194,000 consisted of the following: Fees billed and received. Fees billed but not received at year-end 9. Operating expenses for the law practice included the following: Liability insurance Depreciation and amortization Reserve for bad debts Golf club dues: while attending the club, clients are entertained approximately 30% of the time Charitable donations i Promotion: client lunches i Secretarial services. Computer software: word processing and billing program $170,000 24,000 $194,000 Insurance Mortgage interest $ 10. Charlotte uses 12 square metres of her house exclusively as an office for her law practice. Expenses for the entire 80-square-metre home for all of 2022 consist of the following: $ 2,200 9.100 700 9,000 3.200 1,200 1,600 1,800 400 12,000 900 Depreciation and amortization Reserve for bad debts Golf club dues: while attending the club, clients are entertained approximately 30% of the time Charitable donations Promotion: client lunches Secretarial services Computer software: word processing and billing program arlotte uses 12 square metres of her house exclusively as an office for her law practice. Expenses for the entire 80-square-metre ne for all of 2022 consist of the following: Insurance. Mortgage interest Property taxes Utilities The financial statements do not include the home office costs. 9,100 1,200 1,600 1,800 400 12,000 900 $ 700 9,000 2,300 3,000 $15,000 Charlotte owns a residential rental property, which she had purchased in 2020. Details of the rent and expenses in 2022 are as follows: Rental Repairs and maintenance $ 1.200 Property tax 900 Interest on first mortgage 3,300 (5.400) $ 600 $6.000 As of December 31, there were no unpaid rents from the tenant. 2. Charlotte contributed $11,000 to her RRSP and another $1,000 to a spousal RRSP during the year. She has contributed the same amount to the spousal plan for the past four years. On December 20, her spouse withdrew $4,000 from this spousal account. 3. The following additional receipts and disbursements occurred during the year: Paid dental fees Paid contributions to a registered federal political party Paid interest on late payment of 2021 income tax Received cash dividends (non-eligible) on Roadhouse shares Received proceeds from the sale of a silver tea set (original cost: $1,600) $2,900 1,400 240 1,000 1,100 4. Charlotte received 100 shares of TXE Ltd., a public corporation. The shares were a stock dividend (eligible) on the 2,000 shares she had purchased at $4 per share five years ago. At the time of the stock dividend, the shares were trading at $8. She sold the 100 stock dividend shares in December, at $7. 5 Charlotte's spouse earned $110,000 in 2022. 2020 tax return. Her employer willingly gave her the time off from work to attend the convention even though it was not directly related to her work. In 2022, Charlotte received a reassessment notice from the CRA disallowing the entire convention expense deduction. Now that Charlotte is practising law, she will attend the 2023 convention to upgrade her skills. 7. A review of Charlotte's 2021 tax return shows the following: Maximum RRSP deduction available in 2022 Capital gains deductions claimed in past years Net income from real estate rentals (after deducting a reserve for uncollectible rents of $500) Undepreciated capital cost: Class 1 (rental property) Reserve for unpaid rents $ 10,500 75,000 860 52.000 500 Pas 413 5) C) the Income Tax Act Based on your answer to part (a), calculate Charlotte's federal income tax for the 2022 taxation year. Why did the CRA deny the deduction of Charlotte's 2020 convention expenses? Can she obtain a deduction for the proposed 2023 convention? If so, why?

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a determine Charlottes net income for tax purposes in accordance with the aggregating formula of section 3 of the Income Tax Act and her taxable income for the 2022 taxation year Step 1 Calculate Tota... View the full answer