In 2020, Tom moved 2,874 kilometers from Anytown, BC to Newtown, Alberta to assume the position of manager for his company at the Newtown head office. Tom began his new job on October 1st. He receives a salary of $5,100 per month at his new job at Newtown and received $4,500 per month in his former position at Anytown. Tom has provided you with the following information pertaining to his moving costs:

1. Legal fees on purchase of new home: $ 3,000
2. Payment to a national moving company for the cost of the move: $16,000
3. Payment to the moving company for container storage until Tom was able to take possession of his new home: $1,000
4. Sales Commission on sale of Anytown home: $10,000
5. 21 days accommodations at a hotel in Newtown until he took possession of his new home: $2,100
6. Meals for Tom and his family on the two day trip from Anytown to Newtown: $200
7. Gas receipts for the two day trip: $450
8. Tom received a reimbursement of $15,000 from his employer.

Required: Calculate the maximum amount of moving expenses that Tom can deduct on his 2020 tax return. (CRA travel rates are 52 cents/km for BC and 47 cents/km for Alberta)    

2. Child Care Expenses

Both George and Janice are employed. During 2020, due to a workplace injury George had employment income of $33,000 and was hospitalized for six weeks. Janice was a commissioned salesperson and had employment income of $90,000. Janice’s work required that she travel and this required that they pay for care of their children. Payments for child care amounted to $500 per week, for a total of 48 weeks, which includes the 6 weeks that George spent in hospital. They have three children, none of whom qualify for the disability tax credit. Their ages are 3, 6, and 15 years old.

Required: Determine the maximum amount that can be deducted by George and Janice for

the year ending December 31, 2020 for child care expenses

3. RRSP deduction

During 2019 Harry had the following:

Net Employment Income                                            $71,000

Net Rental Loss                                                          ( 18,000)

Interest Income                                                               1,000

Eligible Dividends Received                                          8,000

Taxable Capital Gains                                                   10,300

Allowable Capital Losses                                           ( 8,000)

Moving Expenses                                                       ( 3,000)

At the end of 2019, Harry had Unused RRSP Deduction Room of $10,000 and had no undeducted contributions in his RRSP account. Harry made an RRSP contribution of $20,000 in February 2020. Harry is not a member of a RPP or DPSP.

Required: Calculate Harry’s Earned Income for 2019 and the maximum RRSP deduction that he can claim for the 2020 taxation year.

4. Loss Carryovers

Dr. Farmer is chiropractor who began a sideline farming business in 2019 growing organic produce believing it would be beneficial to his family's health. With the growing demand for organic options, he is confident he can make the operation profitable within another year

For the years 2019 and 2020 he had the following income and losses:

                                                               2018                2019                 2020

Professional income                            $90,000           $100,000         $120,000

Farming income (loss)                    -               ($6,000)               $2,000

Capital gains (losses)                           $2,000            ($3,600)               $4,000        

Required: Calculate Dr. Farmer’s Net and Taxable Incomes for 2018, 2019 and 2020 assuming he fully utilizes all his losses as early as possible.

5. Associated Corporations

Each of the following cases is separate

1.      Jeremy Hopkins owns 100% of the issued shares of J Ltd. which in turn owns 55% of the issued shares of K Ltd.

2.      Al Solis and Kevin Solis are brothers. Al owns 100% of the issued shares of A Ltd. and 25% of the issued shares of K Ltd. Kevin owns the remaining shares of K Ltd.

3.      Roberta Owens and Rachelle Owens are sisters. They each own 50% of the issued shares of Barone Ltd. Roberta and her spouse each own 50% of the issued shares of Tee Ltd.

4.      Clarence Wong owns 100% of the issued shares of C Ltd. His two sons, Robert and Raymond, each own 50% of the issued common shares of R Ltd. Clarence helped finance R Ltd. by purchasing preference shares of R Ltd. The preference shares were issued to Clarence for $100,000 and are redeemable for the same amount. The preference shares are non-voting and have a non-cumulative dividend fixed at 3%, the prescribed rate in effect at the time the shares were issued. Clarence is the only owner of preference shares.

Required: Determine which of the above corporations are associated.

6. Corporate Tax Payable and RDTOH

Canco Ltd. is a Canadian-controlled private corporation. For its fiscal year ended December 31, 2020, Canco Ltd. had income of $105,000, comprised as follows:

• Interest income	$20,000
• Taxable capital gains	30,000
• Taxable dividends received from
• A Ltd. (non-eligible)	40,000
• B Ltd. (eligible)	15,000

During the year Canco Ltd. paid non-eligible dividends of $16,000 and capital dividends of $4,000.

Canco Ltd. owns 40% of the issued shares of A Ltd. and 5% of the issued shares of B Ltd. A Ltd. received a dividend refund of $20,000 from its non-eligible RDTOH and B Ltd. received a dividend refund of $8,000 as a result of paying dividends during their respective taxation years ended December 31, 2020.

Required:

Determine the dividend refund for Canco Ltd. for its 2020 taxation year. Assume the balance in its Eligible RDTOH and Non Eligible RDTOH accounts at January 1, 2020 were Nil.

Answer rating: 100% (QA)

Required Calculate the maximum amount of moving expenses that Tom can deduct on his 2020 tax return CRA travel rates are 52 centskm for BC and 47 centskm for Alberta ANSWER Toms maximum deduction for ... View the full answer