Canadian Tax Principles: Detailed Individual Income Tax Return Example

This assignment provides a detailed solution to a Canadian individual income tax return, applying key principles of Canadian tax law. It includes calculations for various income sources such as employment income, commissions, self-employment income, rental income, and capital gains. The solution demonstrates the application of allowable expenses, deductions for pension adjustments, RRSP contributions, and net capital losses. The assignment calculates the taxable income, federal tax, and any refund or balance owing, providing a comprehensive example for understanding Canadian tax return preparation. The schedules provided give a breakdown of business income, rental property income, and capital gains. Desklib offers a wealth of resources, including past papers and solved assignments, to support students in their academic pursuits.

Running head: CANADIAN TAX PRICNIPLES
Canadian Tax Principle
Name of the Student:
Name of the University:
Authors Note:

1
CANADIAN TAX PRINCIPLES
Giles Jones Income tax return:
Step 1:
First name and initial Mr Giles Social insurance number
(SIN)
499 499 499
Last name Jones Date of birth
June 25, 1956
Mailing address Marital status Married
Information about residence Information about spouse or common
partner
Step 2
Employment income
230,000.00
Commissions
30,000.00
Other employment income
3,600.00
Old age security pension
CPP and QPR benefits
Disability benefits
Other pension and superannuation
Elected split pension amount
Universal child care benefits
UCCB amount designated as a dependant
Employment insurance and other benefits

2
CANADIAN TAX PRINCIPLES
Taxable amount of dividend
2,691.00
Interest and other investment
income 350.00
Rental income
2,325.00
Capital gain
5,455.00
Self-employment income
Business income
Workers compensation benefits
Social assistance payment
Net federal supplements
Total income 274,421.00
Step 3: Net income
Total income
274,421.00
Pension adjustment
11,000.00
Registered pension plan
deduction 5,500.00
RRSP pooled register
17,600.00
PRPP employer contributions
Universal child care benefit repayments
Child care expenses
Deduction for CPP and QPP contributions
Other deductions
34,100.00

3
CANADIAN TAX PRINCIPLES
Net income 240,321.00
Step 4: Taxable income
Net capital losses of other years
10,500.00
Taxable income 229,821.00
Step 5: Federal tax and provincial or territorial
tax
55,882.26
Step 6: Refund or balance owing
Net federal tax
55,882.26
CPP contributions payable
Employment insurance premium
Social benefits repayments
Provincial or territorial tax
55,882.26
Total payable
55,882.26
Total income tax deducted
90,000.00
Total credits
90,000.00
Refund / balance owing)
(34,117.75)

4
CANADIAN TAX PRINCIPLES
Note: Negative amount represents refund.
June Jones Income Tax return:
Step 1:
First name and initial June Social insurance number
(SIN) 994,994,994
Last name Jones Date of birth 18 Jan, 1959
Mailing address Marital status Married
Information about residence Information about spouse or common
partner
Step 2
Employment income
Commissions
Other employment income
Old age security pension
CPP and QPR benefits
Disability benefits
Other pension and superannuation
Elected split pension amount
Universal child care benefits
UCCB amount designated as a dependant
Employment insurance and other benefits
Taxable amount of dividend
Interest and other investment income
Rental income
Capital gain

5
CANADIAN TAX PRINCIPLES
self-employment income
Business income
2,807.00
Workers compensation benefits
Social assistance payment
Net federal supplements
Total income 2,807.00
Step 3: Net income
Total income
2,807.00
Pension adjustment
Registered pension plan deduction
RRSP pooled register
PRPP employer contributions
Universal child care benefit repayments
Child care expenses
Deduction for CPP and QPP contributions
Other deductions
-
Net income 2,807.00
Step 4: Taxable income
Net capital losses of other years
Taxable income
Step 5: Federal tax and provincial or
territorial tax
421.05

6
CANADIAN TAX PRINCIPLES
Step 6: Refund or balance owing
Net federal tax
421.05
CPP contributions payable
Employment insurance premium
Social benefits repayments
Provincial or territorial tax
421.05
Total payable
421.05
Total income tax deducted
Total credits
-
Refund / balance owing)
421.05
Note: Positive amount represents amount owing.
Schedules:
Business income
Income
7,700.00
Less: Allowable expenses
Depreciation on computer and software
(1995+1300)x40% 1,318.00

7
CANADIAN TAX PRINCIPLES
Heat (2500 x 650/3000)
541.67
Electricity (1100 x 650/3000)
238.33
Insurance (600 x 650/3000)
130.00
Repair (2500 x 650/3000)
541.67
Interest on house (5000 x 650/3000)
1,083.33
Property taxes (4500 x 650/3000)
975.00
Water (300 x 650/3000)
65.00
4,893.00
Taxable income from self-employment
2,807.00
Income from rental property
Rental income
15,000.00
Less:
Property tax
5,250.00
Insurance
1,750.00
Interest on
mortgage 3,275.00
Repair
1,500.00
Maintenance
contract 900.00

8
CANADIAN TAX PRINCIPLES
12,675.00
Taxable rental
income 2,325.00
Capital gain
Sale proceeds
119,700.00
Less: Selling
expenses 95.00
119,605.00
Less:
Cost base
114,150.00
Capital gain
5,455.00