Harjot earned $85,000 in 2021 as a full-time teacher, and also generated revenues or $8,000 from...

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Harjot earned $85,000 in 2021 as a full-time teacher, and also generated revenues or $8,000 from a part-time farm on the family's acreage. The farm expenses totaled $12,000. The following information pertaining to Harjot's 2021 tax return has also been provided to you: 1) Net capital losses from 2020 totaled $10,000, and non-capital losses from 2020 totaled $2,000, and neither could be carried back to previous years. 2) Harjot had the following amounts deducted from his pay during the year: CPP and El of $4,056 (which includes the CPP Enhanced Contribution of $290) and income tax of $19,000. 3) Harjot contributed $5,000 to a TFSA and $15,000 to a guaranteed investment certificate (GIC) which pays 4% annual interest. The first interest receipt for the GIC will be on June 30, 2022. 4) Harjot received a $1,000 non-eligible dividend in 2021. 5) Harjot's spouse works full-time and earns $68,000 a year. 6) Harjot had extensive dental work done in 2021. The total cost was $7,500 and Harjot did not receive any reimbursement for the cost. Required: A. Calculate Harjot's net income for tax purposes for 2021 in accordance with Section 3 of the Income Tax Act. B. Calculate Harjot's taxable income for 2021. C. Calculate Harjot's minimum federal tax liability for 2021. (Round all amounts to zero decimal places. D. Identify carry over item(s) and related amount(s). A. Net Income for Tax Purposes: ITA 3(a) Employment income Non-eligible dividend ITA 3(d) Restricted farm loss $2,500+ 50% ($4,000-$2,500) ITA 3 Net Income for Tax Purposes B. Division C deduction (Non-capital loss of $2,000. Net-capital loss cannot be used as there are no capital gains) CPP Enhanced Contribution Taxable Income C. Federal tax liability $80,610 $49,020 $31,590 Less: Personal federal non-refundable tax credits: Basic Employment CPP/EI ($4,056 - $290) Medical $7,500 - lesser of: Taxable Income 15% $7,353 20.5% $6,476 $82,900 Dividend tax credit Basic federal tax D. Net capital loss Unused farm loss of $750 ($4,000 - $3,250) 1,150 0.03 2,487 2,421 15% 9% $85,000 $1,150 -$3,250 $82,900 -$2,000 -$290 $80,610 $13,808 $1,257 $3,766 $5,079 $23,910 $13,829 -$3,587 -$104 $10,139 $10,000 $750 Harjot earned $85,000 in 2021 as a full-time teacher, and also generated revenues or $8,000 from a part-time farm on the family's acreage. The farm expenses totaled $12,000. The following information pertaining to Harjot's 2021 tax return has also been provided to you: 1) Net capital losses from 2020 totaled $10,000, and non-capital losses from 2020 totaled $2,000, and neither could be carried back to previous years. 2) Harjot had the following amounts deducted from his pay during the year: CPP and El of $4,056 (which includes the CPP Enhanced Contribution of $290) and income tax of $19,000. 3) Harjot contributed $5,000 to a TFSA and $15,000 to a guaranteed investment certificate (GIC) which pays 4% annual interest. The first interest receipt for the GIC will be on June 30, 2022. 4) Harjot received a $1,000 non-eligible dividend in 2021. 5) Harjot's spouse works full-time and earns $68,000 a year. 6) Harjot had extensive dental work done in 2021. The total cost was $7,500 and Harjot did not receive any reimbursement for the cost. Required: A. Calculate Harjot's net income for tax purposes for 2021 in accordance with Section 3 of the Income Tax Act. B. Calculate Harjot's taxable income for 2021. C. Calculate Harjot's minimum federal tax liability for 2021. (Round all amounts to zero decimal places. D. Identify carry over item(s) and related amount(s). A. Net Income for Tax Purposes: ITA 3(a) Employment income Non-eligible dividend ITA 3(d) Restricted farm loss $2,500+ 50% ($4,000-$2,500) ITA 3 Net Income for Tax Purposes B. Division C deduction (Non-capital loss of $2,000. Net-capital loss cannot be used as there are no capital gains) CPP Enhanced Contribution Taxable Income C. Federal tax liability $80,610 $49,020 $31,590 Less: Personal federal non-refundable tax credits: Basic Employment CPP/EI ($4,056 - $290) Medical $7,500 - lesser of: Taxable Income 15% $7,353 20.5% $6,476 $82,900 Dividend tax credit Basic federal tax D. Net capital loss Unused farm loss of $750 ($4,000 - $3,250) 1,150 0.03 2,487 2,421 15% 9% $85,000 $1,150 -$3,250 $82,900 -$2,000 -$290 $80,610 $13,808 $1,257 $3,766 $5,079 $23,910 $13,829 -$3,587 -$104 $10,139 $10,000 $750

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Solution Okay here are the calculations with the answers A Net income for tax purposes for 2... View the full answer