FIN 3020 Project: Rosy Evans' Canadian Tax Liability Analysis

This project analyzes the tax situation of Rosy Evans, a Canadian resident, based on the provided financial information. It calculates her total income, net income, and tax liability for 2019, including a determination of her tax refund. The project details recommendations on tax-related issues, such as deductions for medical expenses, RRSP contributions, and the impact of her lifelong learning ambition (MBA program). It also addresses non-monetary benefits provided by employers, like car usage and concessional loans, and their impact on taxable income. The project considers rental income from a six-plex property, detailing income, expenses, and relevant tax implications. The analysis includes calculations for taxable income, tax payable, and potential tax savings opportunities. This project provides a comprehensive overview of Rosy Evans' financial situation and suggests tax planning strategies.

Running head: TAX
Tax
Name of the Student:
Name of the University:
Authors Note:

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MEMO
Date: 19th April, 2020
To: Evans, Rosy.
From: Professional Tax Expert.
Sub: Recommendation on tax matters
Rosy Evans is a Canadian resident and the calculation of her taxable income and tax liability
have been made in accordance with the income tax provisions applicable to the Canadian
residents. Total income of Rosy in 2019 is $88,895 according to the tax return. Net income of her
in this period is $84,395. Total amount of tax liability on the taxable income of her for the year is
$10,594. Since, quarterly tax instalments of $12,000 has already been paid by her hence, the
amount of tax to be refunded to Rosy in 2019 is $1,629.
Recommendation on tax related issues:
Rose Evans is blind and completely dependant on her daughter Rosy. Generally all medical
expenditures incurred on such disable dependant person is fully allowed as deduction for
computation of taxable income of a tax payer. However, no compliance record with conditions to
be eligible for such deduction has been mentioned in the case study hence, no deduction in
related to medical expenses have been shown in the return except $4,500 against disable and
dependant support.
Contribution to RRSP is fully allowed as deduction for income tax purposes in the country.
Thus, Rosy has made a mistake by not contributing in RRSP despite having a scope of

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contributing $69,000 in RRSP. By contributing any amount in RRSP, she could have reduced
both her taxable income and income tax liability for the period.
Lifelong learning ambition:
The ambition to undergo an executive MBA program in 2025 will help the tax payer to reduce
her taxable income and subsequent income tax liability as both tuition fees and course fee
(provided course fee is eligible for such deduction) are allowed as deduction in computation of
taxable income of a tax payer.
Tax Savings Free Account is a saving account in which savings ad withdrawals both are tax free
for Canadian residents. Thus, by investing in TSFA the tax payer would have been able to reduce
net taxable income and subsequent income tax liability.
Often employers provide various non-monetary benefits to the employees to reduce the tax
burden on the employees. However, to ensure no scope of tax avoidance certain non-monetary
benefits have to be considered in computation of taxable employment income of the employees.
In this case an amount of $12,510 which is 90% of total expenditures incurred on the car
provided to the employee shall be included in computing the taxable income of the employee.
The calculation is shown below:
(11400 x 1800/2000) + (2500 x 1800/200) = $12,510.
Another non-monetary benefit includes providing loans at concessional rate. Accordingly, an
amount of $3,250 shall be included in employment income along with other employment to
compute the net employment income of the employee. The calculation is shown below:
{(100000 x 3% x 1/12) + (100000 x 4% x 9/12)}.

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If ABC Ltd was a CCPC then the stock option granted to the employee would not have affected
the net employment income of the employee.