Question

Molly live in Canada, She is a single parent with two kids the age of 4 and 7. She had the following cash inflow: -Employment income 20,000 -Dividends from CCPC: 10,000 She had the following cash outflow: -RRSP contributions: 1230 Molly had $1,200 federal tax withheld from her employment income, but did not pay any installments. The following year, Molly sold the following: -Share capitals POD = 1270, ACB = 2300 -Non capital assets 4000/12500 She had a previous net capital loss of $6,000 Throughout the year, she had the following medical expenses: -Molly 750 -Both children 1500 (they had no net income) Molly also made political contributions of $300 Required:

1) Determine the net employment income

2) The taxable income

3) The refundable tax credit or due balance

4) Omitted and brief summary why

Answer 1

	Calculation of taxbale income , net employment income. Refund or tax due:
	Assessee:	Molly
	Place of Residence:	Canada
	Cash Inflow:	(Amount in $)	Cash outflow:	(Amount in $)
	Employment Income:	$20,000.00	RRSP Contributions:	$1,230.00
	Dividends from CCPC:	$10,000.00	Tax withheld:	$1,200.00
	Sold shares of:		Medical expense:
	POD	$1,270.00	Molly	$750.00
	ACB	$2,300.00	Both Children	$1,500.00
	Non capital assets:	4000/12500
	Previous net capital loss:	$6,000.00	Political contributions:	$300.00
a	Net employment Income:
	Employment Income	$20,000.00
less	RRSP Contributions:	$1,230.00
	Tax withheld:	$1,200.00
	Net employment income	$18,800.00
b	Taxable Income:
	Net Employment Income	$18,800.00
	Dividends received	$10,000.00
	Gains on selling shares	$3,570.00
	Gain on selling non capital asset	$4,000.00
	Gross Income	$36,370.00
less	Medical Expenses:
	Molly	$750.00
	Both Children	$1,500.00
less	Political Contributions	$300.00
	Net Taxable Income:	$33,820.00
c	Refund or Due on tax:
	Tax payable on employment income:	$3,871.90	(9325*10/100+(33820-9325)*12/100
	Tax payable on gain on sale of property:	$1,514.00	(3570+4000)*20/100
	Total tax payable	$5,385.90
less:	tax withheld	$1,200.00
	net tax payable	$4,185.90
d	omitted and brief summary:
	it has been assumed that the proceeds from sale of shares as the gain since no additional data is given
	same has been assumed in case of non capital assets and the rates applicable for the year 2017-18 are
	considered for determining tax liability.
	it has been assumed that the gain arising out of sale of shares and non current asset is long term in nature
	and 20% rate of tax has been applied