Margaret Lykaios is the president and major shareholder of Measureup Ltd., a Canadian-controlled private corporation that...
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Margaret Lykaios is the president and major shareholder of Measureup Ltd., a Canadian-controlled private corporation that operates a construction business in Regina, Saskatchewan. Measureup earns only business income which is all subject to the small business deduction. In 2021, she had a number of financial transactions. She has asked you to help her prepare her 2021 ta return and provide advice on other tax matters. The following additional financial information is provided for 2021: 1. Margaret's gross salary was $90,000, from which Measureup deducted the following amounts: Income tax $30,000 CPP and El premiums 4,056 Private health insurance premiums 600 Group sickness and accident insurance preminms 400 1 In addition to her salary. Measureup paid $2,000 to a deferred profit-sharing plan, $600 of private health insurance premiums, and $400 of group sickness and accident insurance premiums on Margaret's behalf. 2. Margaret is required to use her own automobile for company business. For this, Measureup pays her an annual allowance of $3,600. She purchased a new automobile for $34,000 plus HST (13%), and received $18,000 as a trade on her old car. At the end of the previous year, the old car nad an undepreciated capital cost allowance balance of $20.000 (Class 10). Of the 20,000 km driven in 2021, 12,000 km were for employment purposes. Margaret incurred automobile operating costs of $5,200. 3. For three months during the year. Margaret was sick and could not attend work. She received $9,000 from the company's group sickness and accident insurance plan. Since the plan's inception, Margaret had paid premiums totalling $2,000 4. Margaret purchased a warehouse property and leased it to Measureup to store construction 199 equipment. The property cost $250.000 (land- $30,000: building - $220,000). The building was originally constructed after March 18, 2007. The price for the land includes $2.000 of permanent landscaping completed just after acquisition. The 2021 rental income is summarized below: Rent received $20,000 Expenses Insurance $(1.200) Property taxes (4.000) Interest (10,000) General maintenance (800) Storage shed addition (3.000) (19.000) Income $ 1.000 Repairs 5. Margaret is a 30% partner in a computer software business but is not active in its management. The partnership financial statement shows a profit of $40,000 for the year ended December 31, 2021. The profit consists of $32,000 from software sales and $8,000 from interest earned. 6. On July 1, 2020, Margaret purchased a three-year guaranteed investment certificate for $20,000 with interest at 10%. The interest compounds annually but is not payable until July 1, 2023. 7. Margaret received (made) the following additional receipts (disbursements) Receipts Dividends (eligible) from Canadian public corporations $ 2.000 Dividends (non-eligible) from Measureup 3,000 Dividends from foreign corporations (net of 10%, foreign withholding tax) 900 Winnings from a provincial lottery 12,000 Dental expenses for children 3,500 Donation to a charity 2.000 Safety deposit box 100 Life insurance premium used as collateral for personal bank loan 800 Investment counsel fees 1,000 Required: Determine Margaret's net income for tax purposes in accordance with the aggregating formula of Section 3 of the Income Tax Act for 2021. Assume Other deductions total $8,000. Disbursements Margaret Lykaios is the president and major shareholder of Measureup Ltd., a Canadian-controlled private corporation that operates a construction business in Regina, Saskatchewan. Measureup earns only business income which is all subject to the small business deduction. In 2021, she had a number of financial transactions. She has asked you to help her prepare her 2021 ta return and provide advice on other tax matters. The following additional financial information is provided for 2021: 1. Margaret's gross salary was $90,000, from which Measureup deducted the following amounts: Income tax $30,000 CPP and El premiums 4,056 Private health insurance premiums 600 Group sickness and accident insurance preminms 400 1 In addition to her salary. Measureup paid $2,000 to a deferred profit-sharing plan, $600 of private health insurance premiums, and $400 of group sickness and accident insurance premiums on Margaret's behalf. 2. Margaret is required to use her own automobile for company business. For this, Measureup pays her an annual allowance of $3,600. She purchased a new automobile for $34,000 plus HST (13%), and received $18,000 as a trade on her old car. At the end of the previous year, the old car nad an undepreciated capital cost allowance balance of $20.000 (Class 10). Of the 20,000 km driven in 2021, 12,000 km were for employment purposes. Margaret incurred automobile operating costs of $5,200. 3. For three months during the year. Margaret was sick and could not attend work. She received $9,000 from the company's group sickness and accident insurance plan. Since the plan's inception, Margaret had paid premiums totalling $2,000 4. Margaret purchased a warehouse property and leased it to Measureup to store construction 199 equipment. The property cost $250.000 (land- $30,000: building - $220,000). The building was originally constructed after March 18, 2007. The price for the land includes $2.000 of permanent landscaping completed just after acquisition. The 2021 rental income is summarized below: Rent received $20,000 Expenses Insurance $(1.200) Property taxes (4.000) Interest (10,000) General maintenance (800) Storage shed addition (3.000) (19.000) Income $ 1.000 Repairs 5. Margaret is a 30% partner in a computer software business but is not active in its management. The partnership financial statement shows a profit of $40,000 for the year ended December 31, 2021. The profit consists of $32,000 from software sales and $8,000 from interest earned. 6. On July 1, 2020, Margaret purchased a three-year guaranteed investment certificate for $20,000 with interest at 10%. The interest compounds annually but is not payable until July 1, 2023. 7. Margaret received (made) the following additional receipts (disbursements) Receipts Dividends (eligible) from Canadian public corporations $ 2.000 Dividends (non-eligible) from Measureup 3,000 Dividends from foreign corporations (net of 10%, foreign withholding tax) 900 Winnings from a provincial lottery 12,000 Dental expenses for children 3,500 Donation to a charity 2.000 Safety deposit box 100 Life insurance premium used as collateral for personal bank loan 800 Investment counsel fees 1,000 Required: Determine Margaret's net income for tax purposes in accordance with the aggregating formula of Section 3 of the Income Tax Act for 2021. Assume Other deductions total $8,000. Disbursements
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COM PUT ATION OF MAR G AR ETS NET IN COM E Sal ary 90 000 Autom obile allowance 3 60... View the full answer
Related Book For
Canadian Income Taxation planning and decision making
ISBN: 9781259094330
17th edition 2014-2015 version
Authors: Joan Kitunen, William Buckwold
Posted Date:
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