FIN 4012 Advanced Financial Planning - James Beach Taxation Case

This document presents a detailed solution to a taxation case study featuring James Beach for the 2017 tax year, as part of the FIN 4012 Advanced Financial Planning course. The case includes a comprehensive overview of James's financial situation, including his employment income, investment income, rental income from his basement, and various expenses related to his home. The solution involves completing the Ontario Tax T1 General form, calculating Ontario non-refundable tax credits, determining Ontario tax on taxable income, accounting for Ontario surtax and tax reductions, addressing the Ontario foreign tax credit, and calculating the Ontario health premium. The document meticulously walks through each step of the tax calculation process, providing specific figures and line references to ensure accuracy and compliance with tax regulations. The case study offers valuable insights into the complexities of personal income tax planning and reporting in Ontario.

Protected B when completed
Ontario Tax ON428
T1 General – 2017
Complete this form and attach a copy to your return. For more information, see the related line in the forms book.
Step 1 – Ontario non-refundable tax credits 5605For internal use only
5804 1Basic personal amount claim $10,171
5808 2Age amount (if born in 1952 or earlier) (use the Provincial Worksheet) (maximum $4,966) +
Spouse or common-law partner amount
Base amount
Minus: their net income from page 1 of your return –
5812 3Result: (if negative, enter "0") = (maximum $8,636)
◄ +
Amount for an eligible dependant
Base amount
Minus: their net income from line 236 of their return –
5816 4Result: (if negative, enter "0") = (maximum $8,636)
◄ +
5819 5Ontario caregiver amount (use the Provincial Worksheet) +
CPP or QPP contributions:
5824 • 6(amount from line 308 of your federal Schedule 1) +
5828 • 7(amount from line 310 of your federal Schedule 1) +
Employment insurance premiums:
5832 • 8(amount from line 312 of your federal Schedule 1) +
5829 • 9(amount from line 317 of your federal Schedule 1) +
5833 10Adoption expenses (maximum $12,409) +
5836 11Pension income amount (maximum $1,406) +
5844 12
Disability amount (for self)
(Claim $8,217, or if you were under 18 years of age, use the Provincial Worksheet.) +
5848 13Disability amount transferred from a dependant (use the Provincial Worksheet) +
5852 14Interest paid on your student loans (amount from line 319 of your federal Schedule 1) +
5856 15Your tuition and education amounts (use and attach Schedule ON(S11)) +
5860 16Tuition and education amounts transferred from a child +
5864 17Amounts transferred from your spouse or common-law partner (use and attach Schedule ON(S2)) +
Medical expenses:
5868 18(Read line 5868 in the forms book.)
19Enter $2,302 or 3% of line 236 of your return, whichever is less. –
20Line 18 minus line 19 (if negative, enter "0") =
5872 21
Allowable amount of medical expenses for other dependants
(use the Provincial Worksheet) +
5876 22Add lines 20 and 21. =
◄ +
5880 23Add lines 1 to 17, and line 22. =
24Ontario non-refundable tax credit rate ×
5884 25Multiply line 23 by line 24. =
Donations and gifts:
26Amount from line 16 of your federal Schedule 9 × 5.05% =
27Amount from line 17 of your federal Schedule 9 × 11.16% = +
5896 28Add lines 26 and 27. =
◄ +
6150 29Ontario non-refundable tax credits
Add lines 25 and 28.
Enter this amount on line 41. =
Continue on the next page.
5006-C
9,500.00
9,500.00
2,564.10
836.19
1,312.00
6,268.00
2,302.00
3,966.00
3,966.00 3,966.00
8,678.29
5.05%
438.25
200.00 10.10
2,800.00 312.48
322.58 322.58
760.83

Protected B when completed
Step 2 – Ontario tax on taxable income
30
Enter your taxable income from line 260 of your return.
If this amount is more than $20,000, you must complete Step 7 – Ontario health premium.
Complete the appropriate
column depending on the
amount on line 30.
Line 30 is
$42,201 or less
Enter the amount from line 30
Line 31 minus line 32
(cannot be negative)
–
=
Multiply line 33 by line 34.
×
=
+
Ontario tax on
taxable income
Add lines 35 and 36.
=
Line 30 is more than
$42,201 but not
more than $84,404
–
=
×
=
+
=
Line 30 is more than
$84,404 but not
more than $150,000
–
=
×
=
+
=
Line 30 is more than
$150,000 but not
more than $220,000
–
=
×
=
+
=
Line 30 is more
than $220,000
–
=
×
=
+
=
31
32
33
34
35
36
37
Step 3 – Ontario tax
38Enter your Ontario tax on taxable income from line 37.
6151 • 39Enter your Ontario tax on split income from Form T1206. +
40Add lines 38 and 39. =
41Enter your Ontario non-refundable tax credits from line 29. –
42Line 40 minus line 41 (if negative, enter "0") =
43
Ontario minimum tax carryover:
Enter the amount from line 42.
44Enter your Ontario dividend tax credit from line 6152 of the Provincial Worksheet. –
45Line 43 minus line 44 (if negative, enter "0"). =
46Amount from line 427 of your federal Schedule 1 × 33.67% =
6154 • 47Enter the amount from line 45 or 46, whichever is less. –
48Line 42 minus line 47 (if negative, enter "0") =
Ontario surtax
49Enter the amount from line 48.
50Enter the amount from line 39. –
51Line 49 minus line 50 (if negative, enter "0") =
Complete lines 52 to 54 only if the amount on line 51 is more than $4,556.
Otherwise, enter "0" on line 54 and continue completing the form.
52(Line 51 minus $4,556) × 20% (if negative, enter "0") =
53(Line 51 minus $5,831) × 36% (if negative, enter "0") = +
54Add lines 52 and 53. =
◄ +
55Add lines 48 and 54. =
Ontario dividend tax credit
6152 • 56Enter your Ontario dividend tax credit from line 6152 of the Provincial Worksheet. –
57Line 55 minus line 56 (if negative, enter "0") =
Ontario additional tax for minimum tax purposes
58
If you entered an amount other than "0" on line 95 of Form T691, enter your Ontario additional tax for
minimum tax purposes from line 58 of the Provincial Worksheet. +
59Add lines 57 and 58. =
Continue on the next page.
5006-C
138,650.00
0.00
5.05%
0.00
42,201.00
9.15%
2,131.00
138,650.00
84,404.00
54,246.00
11.16%
6,053.85
5,993.00
12,046.85
150,000.00
12.16%
13,313.00
220,000.00
13.16%
21,825.00
12,046.85
12,046.85
760.83
11,286.02
11,286.02
250.00
11,036.02
0.00
11,286.02
11,286.02
11,286.02
11,286.02 1,346.00
11,286.02 1,636.51
2,982.51 2,982.51
14,268.53
250.00
14,018.53
14,018.53

Protected B when completed
60Enter the amount from line 59 on the previous page.
Step 4 – Ontario tax reduction
Enter "0" on line 67 if any of the following apply to you:
• You were not a resident of Canada at the beginning of the year;
• You were not a resident of Ontario on December 31, 2017;
• There is an amount on line 58;
• The amount on line 60 is "0";
• Your return is filed for you by a trustee in bankruptcy;
• You are not claiming an Ontario tax reduction.
Otherwise, complete lines 61 to 67 to calculate your Ontario tax reduction.
61Basic reduction
If you had a spouse or common-law partner on December 31, 2017, only the
individual with the higher net income can claim the amounts on lines 62 and 63.
62
Reduction for dependent children born in 1999 or later
6269Number of dependent children × $434 = +
63
Reduction for dependants with a mental or physical impairment
6097Number of dependants × $434 = +
64Add lines 61, 62, and 63. =
65Enter the amount from line 64. × 2 =
66Enter the amount from line 60. –
67Ontario tax reduction claimedLine 65 minus line 66 (if negative, enter "0") =
◄ –
68Line 60 minus line 67 (if negative, enter "0") =
Step 5 – Ontario foreign tax credit
69Enter the Ontario foreign tax credit from Form T2036. –
70Line 68 minus line 69 (if negative, enter "0") =
Step 6 – Community food program donation tax credit for farmers
716098
Enter the amount of qualifying donations that have also been
claimed as charitable donations × 25% = –
72Line 70 minus line 71 (if negative, enter "0") =
Step 7 – Ontario health premium
73
Ontario health
premium
If your taxable income (from line 30) is not more than $20,000, enter "0".
Otherwise, enter the amount calculated in the chart on the next page.
◄ +
74Ontario tax
Add lines 72 and 73.
Enter the result on line 428 of your return. =
Continue on the next page.
5006-C
14,018.53
235.00
235.00
235.00 470.00
14,018.53
0.00 0.00
14,018.53
750.00
750.00

Protected B when completed
Ontario Health Premium
1Enter your taxable income from line 30.
Go to the line that corresponds to your taxable income.
• If there is an Ontario health premium amount on that line, enter that amount on line 73.
• Otherwise, enter your taxable income in the first box, complete the calculation, and enter the result on line 73.
Taxable income Ontario
health premium
not more than $20,000
◄◄◄ $0
more than $20,000, but not more than $25,000 – $20,000 = × 6% =
more than $25,000, but not more than $36,000
◄◄◄ $300
more than $36,000, but not more than $38,500 – $36,000 = × 6% = + $300 =
more than $38,500, but not more than $48,000
◄◄◄ $450
more than $48,000, but not more than $48,600 – $48,000 = × 25% = + $450 =
more than $48,600, but not more than $72,000
◄◄◄ $600
more than $72,000, but not more than $72,600 – $72,000 = × 25% = + $600 =
more than $72,600, but not more than $200,000
◄◄◄ $750
more than $200,000, but not more than $200,600 – $200,000 = × 25% = + $750 =
more than $200,600
◄◄◄ $900
See the privacy notice on your return.
5006-C
138,650.00