Juan Hoop is a 58 year old executive working as the V.P. of Marketing for the X
Question:
Juan Hoop is a 58 year old executive working as the V.P. of Marketing for the X Company. He is married to Lesley and together they have 4 children, Jhonny aged 15, Benjie aged 12, Shirley aged 5 and Annette aged 3.
Both Juan and his spouse work full time. They hired a nanny to take care of the children when they were at work. They paid the nanny $300/week for 44 weeks to look after the children. In July 2021 they paid $3,000 for Jhonny and Benjie to go to summer camp for 4 weeks. Lesley’s earned income in 2021 was $185,000.
You have for several years been preparing his income tax return for him. He has now contacted you for the preparation of his T1 Return for the year 2021.
Juan has provided you with the following information:-
Gross Salary……………………………………………………………………………………$125,000
Income taxes withheld………………………………………………………… 40,000
Canada Pension Plan contributions……………………………………….…3,166
Employment insurance contributions ……………………………………… 800
Additional Information:-
i. Taxable capital gains(allowable capital loss)
Nestle Foods Ltd. (public company)……………………………………………18,000
Shares of Fortis(public company)………………………………………………….1000
ii. Monthly pension of $1,500 from a previous employer…………………………….18,000
Dividends from Bell Canada(public company) cash amount…………………….. 1,000
Sale of 100 shares of AT&T. He incurred an allowable capital loss of……….. 4,500
Interest from a joint account with his spouse at the TD Bank,,,,,,,,,,,,,,,,,,,,,, 1,400
Interest from a GIC ………………………………………………………………………….. 600
Interest on loan to sister…………………………………………………………………………. 260
Dividends from U.S. Corporation(15% withholding tax)…………………………. 5,100
Dividends from McCain foods(CCPC)………………………………………………………. 1,500
Carrying charges on loan to purchase McCain shares……………………………….. 1,000
Iii Juan likes to paint scenes of Ontario in his spare time. In 2021, he exhibited two of his painting in the local art gallery . These were sold for $1,800.
iv. During 2021, Juan sold his three residences, in order to purchase a larger home in a more expensive suburb. The following facts relate to these two residences:-
Date Purchased………….Cost………....Compensation……………….Proceeds
City Home……………………..2012………………………..$190,000…………$42,000………………………$700,000
Cottage………………………..2017………………………… 31,000……………24,000………………………..400,000
Farm…………………………..2019……………………………15,000……………21,000…………………………150,000
iv. Juan also is the owner of two rental properties in Waterloo, Ontario. Details of the two rental properties in 2021 are as follows.:-
Property A……………………….Property B
Rental Revenue……………………………………..$36,000……………………………..$24,000
EXPENSES:-
Utilities………………………………………..7,000…………………………………..5,000
Property taxes……………………………..5,000……………………………………1,700
Repair & Maintenance………………… 8,000…………………………………..7,000
The Undepreciated capital cost at January 1,2021 on Property A was $415,000 and Property B was $330,000. On December 15th.,2021, Juan sold Property B for $600,000. The original cost of the property B was $345,000. He paid real estate commission of $15,000.
v. In May 2021, he used the proceeds from the sale of Property B above to purchase a duplex which he rented . This property was purchased for $900,000. Interest on the $500,000 mortgage was $6,100 for the year 2021. For the 7 months in 2021 he rented the property. Details of the rental is as follows:
Gross Rental Income…………………………..$18,000
EXPENSES:-
Advertising for clients………………(500)
Property taxes…………………………(3,400)
Utilities……………………………………(2,000)
vi. In 2021, Juan contributed $3,000 to his spouse’s RRSP and $5,000 to his own RRSP. His earned income in 2002 was $215,000. The employer reported a pension adjustment of $7,000 for the year. He had unused deduction room from previous years of $10,000.
