INFORMATION TO USE FOR THE TAX RETURN CASE STUDY: James Doode decided to start his own business in 2020 after retiring from the Canadian Armed Forces. Since 2019, James receives monthly pension payments from his former employer's pension plan. James' business (sole proprietorship) consists of a motorcycle shop known as James' Specialty Bike Shop, selling and repairing motorcycles (industry code 441220). James hired you to prepare his personal tax returns for the year 2021. James wants to pay the very least tax possible and will use any election or choice legally available. Attached is an Appendix showing the relevant nancial information pulled from the accounting records for James' business. The amounts shown have n_ot been adjusted for tax purposes. James expects you to identify which items are allowed for tax purposes to comply with the tax laws in Canada. Tax forms James received are included on the Case Study link as separate documents confirming the various items of income described below for the year. Detailed Information: James was born on November 1, 1971. He is divorced but currently lives alone at 123 Main Street, Anytown, Ontario, KOH 1H0. James' Social Insurance Number (SIN) is 527-000-145. During 2021, James received bi-weekly pension payments from his former employer's pension plan for a total pension income of $40,000 - see T4A slip attached issued to James for 2021 (box 16). Federal income tax of $5,000 was withheld at source on that pension income - see box 22 of the T4A slip. James has spousal support obligations from his previous marriage. He is required to pay $1,000 per month to his former spouse (Mary Doode; SIN: 527- 000-129) in accordance with a court order. During the year 2021, James was only able to pay 7 months worth of support. James has no other dependents James made $2,000 charitable donations to the Red Cross on June 1, 2021. Finally, James paid federal income tax instalments of $5,000 quarterly to the CRA throughout the year 2021, for a total of $20,000.APPENDIX Accounting Information for 2021 James' Specialty Bike Shop Revenues Motorcycle and Parts Sales $450,000 Expenses Purchase of inventory, parts and supplies (Note 1) $135,000 Golf club dues (Note 2) 5,000 Fines and penalties (Note 3) 10,000 Insurance (Note 4) 5,000 General office expenses 3,000 Home Office expenses (Note 5) 3,012 Salaries 58,000 Employer contributions to CPP and EI 3,960 Depreciation (Note 6) 41,928 Loss on sale of equipment (note 6) 8,250 Truck expenses (Note 7) 5,700 Total Expenses $278,850 Net Income for accounting purposes $171, 150Note 1: The opening inventory on January 1, 2021 was $15,000. The closing inventory on December 31, 2021 was $35,000. Note 2: James joined the local golf club to find new customers. The membership cost was $5,000 for the year. Note 3: In 2020 the business was sued for selling branded motorcycle parts without proper authorization from the brand owner. In early 2021, James reached an out-of-oourt settlement with the brand owner which provides that James will pay a penalty of $10,000 for pro-2021 transactions that were completed without proper authorization, in exchange for the brand owner dropping the charges against him. The penalty was paid January 1, 2021. The agreement also provided that James would enter into a new distributorship agreement with the brand owner effective January 1, 2021 - see Note 7 below for further details under "Intangible Assets". Note 4: The insurance expense includes the cost of the truck insurance of $2,000 see Note 7 below. Box- Cas Amount - Montant Box _ Case Amount - Montant Box _ Case Amount - Montant Box _ Case Amount - Montant T4A (20) Protected B wh Box_ Case Amount - Montant Box - Case Amount - Montant Box - Case Amount - Montant Box _ Case Amount - Montant Payer's name - Nom du payeur 1+1 Canada Revenue Agence du revenu Agency du Canada T4A CAF REGISTERED PENSION PLAN Year Statement of Pension, Retirement, Annuity, 101 COLONEL BY DRIVE 2021 Annee and Other Income OTTAWA, ONTARIO Etat du revenue de pension, de retraite, de rente K1A 0K2 ou d'autres sources Pension or superannuateon - line 11500 Prestations de retraite ou autres Income tax deducted - line 43700 061 Payer's program account number / Numero de compte de programme du payeur pensions - ligne 11500 mpot sur le revenue retenu - ligne 43700 XXXXXXXXXXXXXXX 016 40,000 00 022 5,000 00 Social insurance number Recipient's program account number Numero d'assurance sociale Numero de compte de programme Lump-sum payments - line 13000 Self-employed commissions du beneficiaire Paiements forfaitaires - ligne 13000 Commissions d'un travail independant 012 527 000 145 013 018 020 Fees for services Annuities Recipient's name and address - Nom et adresse du beneficiaire Honoraires ou autres sommes Rentes pour services rendus Last name (print) - Nom de famille (en lettres moulees) First name - Prenom Initials - Initiales 024 048 DOODE JAMES Other information (see page 2) 123 MAIN STREET Autres renseignements (voir a la page 2) ANYTOWN, ONTARIO Box _ Case Amount - Montant Box- Case Amount - Montant KOH 1HO T4A (20) Protected B when completed/ Protege B une fois rempl Box - Case Amount - Montant Box - Case Amount - Montant Box- Case Amount - Montant Box - Case Amount - Montant Box - Case Amount - Montant Box - Case Amount - Montant Box- Case Amount - Montant Box - Case Amount - Montant Box - Case Amount - Montant Box - Case Amount - MontantCanada Revenue Agence du revenu Payer's name - Nom du payeu Agency du Canada T4A CAF REGISTERED PENSION PLAN 101 COLONEL BY DRIVE Yea Statement of Pension, Retirement, Annuity, Annee 2021 and Other Income OTTAWA, ONTARIO Etat du revenude pension, de retraite, de rente K1A 0K2 ou d'autres sources Pension or superannuateon - line 11500 Prestations de retraite ou autres Income tax deducted - line 43700 061| Payer's program account number / Numero de compte de programme du payeur pensions - ligne 1 1500 Impot sur le revenuretenu - ligne 43700 XXXXXXXXXXXXXXX 016 40,000 00 022 5,000 00 Social insurance number Recipient's program account number Numero d'assurance sociale Numero de compte de programme Lump-sum payments - line 13000 du beneficiaire Self-employed commissions Paiements forfaitaires - ligne 13000 Commissions d'un travail independant 012 527 000 145 013 018 020 Fees for services Recipient's name and address - Nom et adresse du beneficiaire Annuities Honoraires ou autres sommes Rentes pour services rendus Last name (print) - Nom de famille (on lettres mouldes) First name - Prenom Initials - Initiales 024 048 DOODE JAMES Other information (see page 2) 123 MAIN STREET Autres renseignements (voir a la page 2) ANYTOWN, ONTARIO KOH 1HO Box - Case Amount - Montant Box- Case Amount - Montant T4A (20) Protected B when completed / Protege B une fois rempl Box - Case Amount - Montant Box - Case Amount - Montant Box- Case Amount - Montant Box - Case Amount - Montant Box - Case Amount - Montant Box_ Case Amount - Montant Box_ Case Amount - Montant Box - Case Amount - Montant Box - Case Amount - Montant Box_ Case Amount - Montant Canada Revenue Agence du revenu Payer's name - Nom du payeu Agency Ju Canada T4A CAF REGISTERED PENSION PLAN Statement of Pension, Retirement, Annuity, 101 COLONEL BY DRIVE Year Annee 2021 and Other Income OTTAWA, ONTARIO Etat du revenude pension, de retraite, de rente K1A 0K2 ou d'autres sources Pension or superannuateon - line 11500 Prestations de retraite ou autres Income tax deducted - line 43700 061 Payer's program account number / Numero de compte de programme du payeur pensions - ligne 11500 Impot sur le revenuretenu - ligne 43700 XXXXXXXXXXXXXXX 016 40,000100 022 5,000,00 Social insurance number Recipient's program account number