Dr. Sweet is a dentist with a well-established practice in Smith Falls, Ontario. She has sought your advice regarding the deductibility of the following expenditures made during the current taxation year. Discuss whether or not the following items would be deductible for tax purposes, and provide her with relevant citations where possible:

1. Insurance payments included a $680 premium for coverage of her office and contents, $1,800 for malpractice coverage, and $1,700 in life insurance premiums.

2. Payments were made to a collection agency in the amount of $1,250 for assistance in collecting past due amounts from patients.

3. Contributions of $600 were made to various registered charities.

4. Dr. Sweet paid a total of $18,000 to her husband for his services as a full-time bookkeeper and receptionist.

5. Dr. Sweet paid $5,000 for a painting by a Canadian artist that has been hung in her waiting room. This painting was capitalized on the financial statements.

6. An amount of $1,000 was paid for membership in a racquets club. In addition, $1,300 was spent for court time, approximately 40 percent of which was for time spent playing with patients.

7. Dr. Sweet was required to pay federal taxes of $13,000.

8. During the year, Dr. Sweet spent $3,200 purchasing provincial lottery tickets.

Answer rating: 100% (QA)

Solution Advise Dr Sweet with respect to the deductibility of the preceding expenditures in the calc... View the full answer