Accounting 217 Personal Taxation: Individual Tax Computation 2017

This assignment solution provides a detailed computation of federal taxes payable for Mr. and Mrs. Sorter for the 2017 taxation year, as per the requirements of Accounting 217 Personal Taxation. It includes the calculation of Rachel's total income from employment, investments, RRSP, and pension, followed by deductions for RRSP, operating expenses, asset costs, and machinery costs to arrive at her net income and taxable income. The federal tax amount payable by Rachel is then computed based on the applicable tax brackets. Similarly, the assignment calculates Roland's total income from employment and RRSP, followed by deductions for RRSP and vehicle costs to determine his net income and taxable income. Finally, the federal tax payable by Roland is computed based on his taxable income. The document is formatted as a memo to the clients, providing a clear and concise overview of their tax obligations.

Tax Computation of Individual
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Name of the student
Topic-
University Name
TABLE OF CONTENT

Tax Computation of Individual
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S
memo....................................................................................................................................................1
Computation of the Net income of the Rachel......................................................................................1
Commutation of the net income after deducting all the expenses.......................................................4
Taxable income for the Rachel IN 2017.................................................................................................6
Net income of Roland............................................................................................................................9
Computation of the Net income of Roland..........................................................................................10
Computation of the taxable income for Roland..................................................................................11
Computation of the Tax of the Roland................................................................................................12
REFERENCES........................................................................................................................................14

Running Head: Tax Computation of Individual
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MEMO
To Mr. and Mrs. Sorter
Addresses
Date-
Dear Sir/ Madam
It is the amount of tax which need to be paid by individual on their income. There is income
tax slab issued by the income tax authority of the Canada. This slab rate is used by the
individual to compute his income tax payment.
Individual in the Canada needs to pay tax on their income.
This could be understood with the simple example that income tax is chargeable by
zero % for the starting income of $ 46605 as it is exempted amount to pay tax to government.
After that, rest amount will be taxed accordingly.
Description of the payment of tax
 Exempt income till $ 46605.
 Next 46605 amount of income will be charged @ 15%.
 Next following $ 46605 will be charged @ 20.5%.
 After that 29% will be tax charged till $ 205843.
Rest of the income will be charged at the rate of 33% $205,842
It is analysed that Ronald will pay tax amount of 7,463.00 to government. In
addition to this, Rachel will pay tax of $ 55242 to government (Caron, et al. 2018).
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COMPUTATION OF THE NET INCOME OF THE RACHEL
Calculation of Total income of Rachel
Income from employment
Business revenue from legal practice $
4,11,000.00
Total income from employment $
4,11,000.00
Income from Investments
Capital Gains $
12,750.00
Eligible Dividends $
11,500.00
Interest income $
6,300.00
Total investment income $
30,550.00
Income from RRSP
Additionally contribution $
14,500.00
Un-deducted contribution $
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8,800.00
Total income from RRSP $
23,300.00
Pension income transferred from
spouse
$
2,300.00
Total income $
4,67,150.00
(Lammam, Palacios, & MacIntyre, 2018).
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COMMUTATION OF THE NET INCOME AFTER DEDUCTING ALL THE
EXPENSES
Calculation of Net income of Rachel
Total income $
4,67,150.00
Less: deductions
RRSP Deduction
Earned income $
1,16,000.00
18% of earned income $
20,880.00
Cost of operating expenses
Building operating costs $
29,400.00
Salaries and wages $
53,200.00
office costs $
21,800.00
Meals with clients $
8,600.00
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Total costs $
1,13,000.00
Assets costs
A client list from a retiring
lawyer
$
23,000.00
New laptop computer $
1,400.00
Applications software $
3,600.00
Total assets acquisition costs $
28,000.00
Machinery costs
Cost of vehicle $
7,571.43
Operating costs $
4,200.00
Total machinery costs $
11,771.43
Capital costs of furniture $
29,500.00
Family's medical expenses $
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Running Head: Tax Computation of Individual
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22,460.00
Total deductions $
2,25,611.40
Net income $
2,41,538.60
TAXABLE INCOME FOR THE RACHEL IN 2017
Calculation of Taxable income
Net income $
2,41,538.60
Less:
Non-capital losses
UCC value of furniture $
13,594.00
Less: Capital costs of
furniture
$
29,500.00
Non-capital losses $ -
15,906.00
UCC value of building $
4,33,521.00
Cost of building $
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5,00,000.00
Non-capital losses $ -
66,479.00
Capital gain $
12,750.00
Taxable income $
2,28,788.60
Computation of the federal tax amount payable
Calculation of federal tax
Taxable income 228789 Details of the tax Charged
First 46,605 6990.75 15% on the next $46,603
46605-93,208 9554.03 20.5% on the next $46,603
91831-144,489 13333.1 26% on the next $51,281
144,489 up to $205,842 17792.4 29% on the next $61,353
$228789- $205,842 7572.18 33% of taxable income over $205,842
Total tax 55242.4
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Tax rounded up 55242
NET INCOME OF Roland
Calculation of Total income of
Roland
Income from Employment
Salary $ 66,500.00
RPPC $ 4,600.00
EI premiums $ 836.00
Total income from
employment
$ 71,936.00
Income from investment
Income from RRSP
Unused contribution $ 5,500.00
No Income portion $ 4,500.00
Income $ 1,000.00
Total income $ 72,936.00
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COMPUTATION OF THE NET INCOME OF Roland
Calculation of Net income
Total income $
72,936.00
Less deduction
RRSP deduction
Earned income $
48,000.00
180% of earned income $
8,640.00
Pension adjustment $
4,100.00
Cost of vehicle $
5,689.29
Operating costs $
5,600.00
Total cost of travel $
11,289.29
Hotel costs $
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2,800.00
Food on out of town
trips
$
930.00
Total $
3,730.00
Allowance $
3,730.00
Total deductions $
24,029.29
Net Income $
48,906.71
COMPUTATION OF THE TAXABLE INCOME FOR ROLAND
Calculation of taxable income
Net income 48906.71
Less deductions 0
Taxable income
(Nicholls, et al. 2018).
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COMPUTATION OF THE TAX OF THE ROLAND
Calculation of Federal tax
of Roland
Taxable income $
48,906.7
1
0-46605 $
6,990.75
46605-48906 $
471.71
Total tax $
7,462.46
Tax rounded up $
7,463.00
.
15% on the next $46,603
20.5% on the next $46,603
(Gordo, & Wen, 2018).
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REFERENCES
Nicholls, C. C., Sandler, D., Tedds, L. M., & Compton, R. A. (2018). Quantifying the
Personal Income Tax Benefits of Backdating: A Canada–US Comparison. Columbia
Journal of Tax Law, 3(2).
Caron, J., Cole, J., Goettle, R., Onda, C., McFarland, J., & Woollacott, J. (2018).
Distributional implications of a national CO2 tax in the US across income classes and
regions: A multi-model overview. Climate Change Economics, 9(01), 1840004.
Gordon, D. V., & Wen, J. F. (2018). Tax penalties on fluctuating incomes: estimates from
longitudinal data. International Tax and Public Finance, 25(2), 430-457.
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