ACCT 421: Analysis of Andino Family's 2019 Tax Return - Winter 2020

This assignment provides a detailed calculation of the Andino family's income and expenses for the 2019 tax year. It covers Bruno's business income, including revenues, various business expenses, and capital cost allowance calculations for different asset classes. The assignment also includes an analysis of rental income and expenses, investment income (dividends), and Sylvia's employment income, including T4 information, deductions, and medical expenses. The document reconciles the gross profit for both spouses, calculates the total gross profit, and identifies potential tax planning issues, such as the business loss and the impact of rental property expenses. The analysis also highlights areas where proper financial reporting and documentation are crucial for accurate tax filings and the importance of adhering to proper financial practices. Finally, it provides an overview of medical expenses, child care expenses, and other deductions, with recommendations for improved tax planning strategies.

SOLUTION
Calculation of profit/ loss for the Bruno and Sylvia separately
INCOME FROM BUSINESS
Revenues 72,980.77
Membership dues - Business Writers’ Association 461.00
Business insurance (606.65)
Bank service charges (110.00)
Charitable donation to United Way 1,500.00
Cell phone air time (for business) 960.50
Postage and courier charges (162.00)
Supplies (1,760.73)
Separate business phone line charge (798.69)
Fees for accounting and tax advice (1,275.00)
Air fare (business travel) 2,520.71
Hotels (business travel) 1,308.21
Meals when traveling on business 1,375.23
Meals and drinks when entertaining clients 3,879.20
Golf green fees while playing with clients 750.00
UCC of furniture - beginning of year (Class 8) (2,350.00)
UCC of computer application software (Class 12) – beg. of year (824.00)
UCC of computer hardware (Class 50) - beginning of year (2,640.00)
Application software purchased December 1, 2019 (2,006.00)
Laptop computer purchased July 1, 2019 (2,449.00)
70,753.55
Business Use of House Costs:
Area of home used for business (square feet) (300.00)
Total area of home (square feet) (2,700.00)
Gas (2,651.51)
Electricity (1,343.93)
Insurance – house (1,500.44)
Snow plowing contract (500.00)
Furnace repairs (1,500.00)
Painting of house interior (2,400.50)
Mortgage interest paid to Royal Bank (8,725.83)
Mortgage life insurance premiums (not for collateral) (600.00)
Mortgage principal paid (3,750.50)
Property taxes (5,106.64)
Interest on late property taxes (25.83)
(31,105.18)
Vehicle Costs: (all annual costs)
Parking (391.15)
Gas (3,050.00)
Maintenance and repairs (654.54)
Car insurance (1,789.00)
License and registration fees (84.00)

UCC of Class 10.1 - beginning of year (15,550.00)
(21,518.69)
demand loan interest and penalties 2019
Interest on credit cards for business expenses (475.23)
Interest on loan to buy laptop and software for business (226.17)
Interest on loan to make 2018 RRSP contribution (195.90)
Interest on loan to purchase Big Gain Ltd. shares (4,200.00)
Interest & penalty on late payment of 2018 income tax (153.75)
Interest on insufficient tax instalments for 2019 (28.85)
Interest on late GST/HST payments (90.92)
(5,370.82)
Rental Income
Address – 767 Stampede Street, Calgary, AB, T3M 5G5
Gross rents 18,000.00
Property taxes (5,625.00)
Insurance (1,990.00)
Utilities (1,245.00)
Interest on mortgage (4,768.22)
Payment on principal (3,149.44)
Repairs and maintenance (3,262.43)
Snow removal and landscaping annual contract (600.00)
(2,640.09)
SUMMARY
FROM BUSINESS
Revenue 91,549.62
Purchases (9,168.07)
Expenses (52,623.87)
Interest paid on demand loan (5,370.82)
PROFIT 24,386.86
FROM RENTAL PROPERTY
Income 18,000.00
Expenses (20,640.09)
Loss (2,640.09)
Sale proceeds from investment shares (Canabis Solutions Inc. 25,000.00
Profit 25,000.00
Gross Profit 46,746.77
Sylvia
Income T5
T5 BOX Slip 1 Slip 2
Issuer Flower Corp. TD Bank
Recipient Sylvia Joint 50% each
Actual amount of eligible dividends 24 2,000.00
Taxable amount of eligible dividends 25 2,760.00
Interest from Canadian sources 13 ($1,010.12)

1,749.88
Sylvia also received the following T4 from her employer:
Sylvia – T4 BOX AMOUNT
Issuer – DaveCo
Employment income (includes option) 14 175,500.00
Employee’s CPP contributions 16 (2,748.90)
Employee’s EI premiums 18 (860.22)
RPP contributions 20 (5,000.00)
RP Plan registration number 50 87675644
Pension adjustment 52 (10,000.00)
Income tax deducted 22 (62,455.44)
Stock option deduction 110(1)(d) 39 (5,250.00)
Charitable donations 46 (3,900.00)
Medical plan premiums 85 (3,525.00)
81,760.44
T3 INFORMATION
Foreign non-business income (Canadian dollars) 25 1,506.86
Foreign income tax paid - investment (Canadian
dollars) 34 (151.00)
Other income – interest 26 (537.00)
Actual amount of eligible dividends 49 750.00
Taxable amount of eligible dividends 50 1,035.00
1,853.86
The Andino family also incurred medical expenses not covered by Sylvia’s
plan as follows:
Orthodontist for Jessica $10,300.00
Other medical expenses for Jessica $7,520.00
Prescription drugs for Argos $430.00
Medical marijuana for Bruno $4,980.00
chield care expenses
# of weeks
Amoun
t
Little Lambs Daycare Inc. 48 $15,000.00
No Worries Childcare Inc. 48 $6,700.00
Clarke Griswold (babysitter) 2 $890.00
SUMMARY
SYLVIA T5 INFORMATION
Taxable amount of eligible dividends 2,760.00
Interest from Canadian sources (1,010.12)
1,749.88
T4 INCOME
Employment income (including options) 175,500.00
Deductions (93,739.56)
81,760.44
Sylvia T3 Information
Foreign non-business income (Canadian dollars) 1,506.86
Foreign income tax paid - investment (Canadian dollars) (151.00)

Other income – interest (537.00)
Actual amount of eligible dividends 750.00
Taxable amount of eligible dividends 1,035.00
2,603.86
Medical expenses
Orthodontist for Jessica (10,300.00)
Other medical expenses for Jessica (7,520.00)
Prescription drugs for Argos (430.00)
Medical marijuana for Bruno (4,980.00)
(23,230.00)
child care expense
Little Lambs Daycare Inc. ($15,000.00)
No Worries Childcare Inc. ($6,700.00)
Clarke Griswold (babysitter) ($890.00)
($22,590.00)
GROSS PROFIT 40,294.18
RECONCILLIATION OF THE SPAUSE GROSS PROFIT
Bruno Gross Profit 46,746.77
Sylvia Gross Profit 40,294.18
TOTAL GROSS PROFIT 87,040.95
Based on the tax return for Adino Family, the following are assumptions
made
I. That Adino and Sylvia (spouse) are legally married and are living in one
location or address within the canada
II. Tax return was also filed in absence of sales receipts or payslips
III. It was also assumed that in the previous year, the Adino family filed
tax returns
The total Gross profit for the Adino Family for the year ending 31/12/2019 is
49,903.25 and which is subject to taxation. As per the taxfree output, the tax
paid is 62,455.44 with amount of the owing refund is 21,455.78.
Proper tax planning issues should be put in place, it is evident that the Adino
business made a loss and was taxed, the rental property earned a loss due
to huge tax inposed on the property. Proper audited financial reports should
be done in order to ascertain the correct financial position of the business
and in turn have proper valuation on the tax return to be submitted to the
CRA.

It is also evident that the business in the proper manner in such a way that
Adrion withdrew 30,000 from the joint account without the consent of sylvia.
The transactions done at any particular time must be agreeable with the two
partners and recorded for reconciliation. Finally, to avoid penalties, tax
return should be filled on time.