Question

Mr. Caldeira is employed by a large public corporation and for 2019 his salary was $_116,000_. He was a member of the company’s pension plan and his contributions were matched by his employer. He contributed $800.84 to the plan and the amount shown on his T4 slip along with an entry of $1,601.68 in box 52 representing his pension adjustment. Union dues were deducted of $750.

During 2019, his employer withheld the following amounts from his compensation:

      

EI Premiums                                                                                $860.22

CPP Contributions                                                                       $2,748.90

Income Tax Deducted                                                                $_22,200_

He also made RRSP contributions of $200 a month for the year and had enough contribution room. Last year he had non-capital losses of $_5,000_ that he could not use in 2018 and was carried forward to 2019.

Mr. Caldeira owns 1,000 preferred shares of Iron Works shares, a publicly-traded taxable Canadian corporation and received four dividend payments of $102 and sold his shares and received proceeds of disposition of $36 per share and his adjusted cost base for each share was $20. Mr. Caldeira also received interest payments totalling $365 based on his balance in his savings account at the same bank and had carrying charges of $95.

Mr. Caldeira is the sole provider for the family and Lily his wife works part-time and had a Net Income of $7,800. They have two young children Lois and Arsenio aged seven and eleven and paid medical expenses of $2,650 in 2019. He also contributed to various charities in the amount of $90 and his wife contributed $80 to local charities.

Required:

Determine Mr. Caldeira’s Total Income, Net Income, Taxable Income, and the Net Federal Tax owing or refund for 2019, not including Provincial Taxes.

Answer 1

Computation of Total Income

(+) Salary Income= $116,000

(-) EI premium withheld=$860

(-) CPP contribution withheld= $2,749

(-) Income tax deducted= $22,200

(+) Dividend Income= $408

(+) Amount from sale Proceeds= $36,000

(+) Wife's part time income= $7,800

(+) Saving bank account interest= $365

(-) Adjusted cost base= $20,000

Total Income= $114,764

Computation of Net Income

Total Income= $114,764

(-) Non-Capital Loss= $5,000

(-) Carrying Charges= $95

Net Income= $109,669

Computation of Taxable Income

Net Income= $109,669

(-) Contribution to pension plan =$801

(-) Pension Adjustment= $1,602

(-) Union dues deduction= $750

(-) RRSP Contribution= $2400

(-) medical expenses of children= $2,650

(-) Contribution to various charities= $90

(-) Wife contribution to local charity= $80

Total Taxable Income= $ 101,296

Federal Tax @10%= $10,129.65

Income after federal tax= $91,166.83

IncomeTax Payable @28%= $25,526.71

Tax deducted by employer= $22,200

Thus, Tax payable/owing= $3,526.71

Total Income= $114,764

Net Income= $109,669

Total Taxable Income= $ 101,296

Additional Tax payable/owing= $3,526.71