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Jim, age 45, is a widower since the year of 2011 when his wife suddenly passed away.
He has calculated his net income for tax purposes, for 2014, to be $86,000, which is
comprised of $80,000 in employment income and $4,000 of net taxable capital gains.
He has a net capital loss carryforward from 2009 of $6,000 which he would
like to utilize if possible. Other important data about Jim, for 2014, is as follows:
a) He has two children, Sarah, age 10, and Sam, age 6
b) Sarah is a dancer and he spends $5,000 per year on her competitive dance
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ASSIGNMENT #1 -Non refundable tax credits and Adv Cap Gains Rules
c) Sam is a hockey player and he spends $2,500 on his hockey fees/tournaments
d) Jim spend $3,000 on braces for Sarah in 2014. All other medical expenses
are covered by his employer's health plan.
e) Jim contributed to several charities in the year: Hospital for Sick Kids - $200 and
Princess Margaret Hospital - $1500.
f) Jim takes the TTC to work with a monthly pass at a cost of $120 per month.
g) Jim bought his first home this year. Prior to this, he lived with his mother as she
helped him with the kids.
Required:
a) Calculate Jim's Taxable income for 2014.
b) Calculate Jim's minimium taxes payable (federal only) for 2014 after deducting non-refundable
tax credits. Use the tax rates and NRFTC amounts from the back of the KPMG book.
4
2 answers
#1 step 1
House Cottage
years owned 2011 - 2015 2013-2015
5 3
# step 2
500,000 250,000
(400,000) (150,000)
(20,000) (10,000)
--------------- ----------------
GG 80,000 90,000
step3
80000/5 90000/3
16 000 30000
step4
3 2
step5
80000 90000
(1+3)/5 x 80000 (64000)
(1+2)/3 x 90000 (90000)
----------------------------------------------------------------------------
CG after exemption 16000 0
TCG 8000 0
House Cottage
years owned 2011 - 2015 2013-2015
5 3
# step 2
500,000 250,000
(400,000) (150,000)
(20,000) (10,000)
--------------- ----------------
GG 80,000 90,000
step3
80000/5 90000/3
16 000 30000
step4
3 2
step5
80000 90000
(1+3)/5 x 80000 (64000)
(1+2)/3 x 90000 (90000)
----------------------------------------------------------------------------
CG after exemption 16000 0
TCG 8000 0