Annalise Keats is the owner of Sharp, a proprietorship which retails high end knives as well as offering knifesharpening services to restaurants. Its' income statement, as well as notes Annalise has p
Part A
Monthly payments that Annalise receives from his ex-spouse
Spousal support/ spousal maintenance $ 1600
Child support $ 1500
Before 2017, spousal support was subject to taxation and therefore, the $1,600 will be part of the taxable income. Child support is non-deductible for the payer and non-taxable for the recipient (Annalise.)
Part B
Annalise is wondering what her maximum deductible contribution to her RRSP would be. Calculate for her Maximum deductible contribution
| 2017 | 2018 | ||
| Employee RPP(400*14)(350*12) | 5,600 | 4,200 | |
| Total RPP(5600+4200) | 9,800 | ||
| Unused RRSP | 45,800 | ||
| Undeductable RRSP | -6000 | ||
| Total | 49,600 | ||
| Actual contribution as at February 23,2018 | 2017 | 2018 | Total |
| Employee RPP | 5,600 | 4,200 | |
| Personal RPP(350*14)(250*12) | 4,900 | 3,000 | |
| Unused RRSP | 45,800 | ||
| Total | 56,300 | 7,200 | 63,500 |
| Less unused RRSP | -6000 | ||
| Total | 57,500 | ||
| March and April | |||
| Employee RPP (400*2) | 800 | ||
| Personal RPP(350*2) | 700 | 1500 | |
| total | 59,000 | ||
| -10,000 | |||
| For remaining period | 49,000 |
Part C
| Sharps income statement | ||
| Sales | 205,000 | |
| purchases | 68,100 | |
| Expenses | ||
| -Wes | 17,300 | |
| -Asher | 700 | |
| Vehicle | 13,900 | |
| Entertainment | 1,400 | |
| Advertising expenses | 3,200 | |
| Computer costs | 1,320 | |
| Charitable donations | 4,000 | |
| Wage epenses | 109700 | |
| Truck cost | 42100 | |
| Vehicle expenses | 26900 | |
| Entertainment expense | 15601 | |
| Advertising expense | 14700 | |
| Miscellaneous expense | 8556 | |
| Total expenses | (244336) | |
| Revenues | ||
| Income | 484435 | |
| Sharpening revenues | 76,112 | |
| Truck sale proceeds | 3,900 | |
| Land sell proceeds | 253000 | |
| Building proceeds(83.804%) of 94% of 325000 | 321841.78 | |
| Total revenues | 1139288.78 | |
| Total Net income | 847,352.78 | |
Part D
The PRE on sale of a home, it provides homeowners with an exemption from tax on the capital gain realized when you sell the property that you have designated as your principal residence. Since this was a permanent residence there is need for the principle residence exemption to apply. As Annalise was selling the home, she was 5% tax on $ 6,000 that is the net income from the sale of the home. The remaining $ 430,000 is treated as capital gain.
Part E
Net income for tax purposes for Wes, Connor, Asher, Frank, Bonnie and Nate as at 2017
| WES | |
| Child support (tax exempt $1,200 ) | Nil |
| Wages | 17,300 |
| Taxable income for 2018 | 17,300 |
| less Tution | -6,700 |
| Federal taxable income | 10,600 |
| No taxes payable as this is below $11,809 | |
| Net income | $10,600 |
| Connor | |
| Child support (tax exempt $1,200 ) | Nil |
| Annalise shares (10,000*0.9825) | 9,825 |
| Wages | 9,000 |
| Taxable income for 2018 | 18,825 |
| Physical therapy (0.5*1600) | 800 |
| Federal taxable income | 19,625 |
| Federal taxes payable (19,625-11,809*15%) | (1,172.40) |
| Net income | $18452.60 |
| Asher | |
| Child support (tax exempt $1,200 ) | Nil |
| Resp | 2,400 |
| Shares 600*7 | 4,200 |
| Wages | 700 |
| Federal taxable income | 7,300 |
| No taxes payable as this is below $11,809 | |
| Net income | $7,300 |
| Bonnie | |
| Canada savings bond | 2,900 |
| Federal taxable income | 2,900 |
| No taxes payable as this is below $11,809 | |
| Net income | $2,900 |
| Nates | |
| Alberta works welfare program ($7,250) will be tax exempt due to special needs | Nil |
| Federal taxable payable | Nil |
| Frank | |
| Pension Fund | 9,300 |
| Wages(for taking care of kids) | 4,800 |
| Federal taxable income | 14,100 |
| Federal taxes payable (14,100-11,809*15%) | (343.65) |
| Net income | $13756.35 |
| Annalise | |
| Spousal support(1600*12) | 19,200 |
| Wages | 18,800 |
| RPP premiums | 300 |
| Medical/Dental plan | 930 |
| Grandmother's Jewllery(3500-2300) | 1,200 |
| Dividends (non-taxable 15,950) | Nil |
| Delfino | 4,000 |
| Prescription medicine(0.2*3800) | 760 |
| Federal taxable income | 45,190 |
| Federal taxes payable (45,190-11,809*15%) | (5,007.15) |
| Net income | $40,182.85 |
Part F
Annalise
| Net income for tax purposes | |
| Spousal support (1600*12) | 19,200 |
| Salary | 18,800 |
| Cottage(145,000-8,500= 136,500-108,000) | 28,500 |
| Condo(465,000-18,500=446,500-456,000) | -9,500 |
| Grandmothers jewellery (3500-2300) | 1,200 |
| Delfino shares | 4000 |
| Net income for tax purposes | 62,200 |
| Federal tax (18% of 62,200) | -18,660 |
| Net income | 43,540 |
