Accounting 217: Federal Tax Computation for Sorter Family (2017)

This assignment presents a detailed federal tax computation for Mr. and Mrs. Sorter for the 2017 taxation year, as per the requirements of Accounting 217. It includes a memo outlining the income tax obligations in Canada, followed by computations of Rachel's total income, net income after deductions (including RRSP deductions, operating expenses, and asset costs), and taxable income. The computation also covers non-capital losses and capital gains. Finally, it calculates the federal tax amount payable by Rachel. Similarly, the assignment computes Roland's total income, net income after deductions (including RRSP deductions and travel expenses), taxable income, and federal tax payable. The document concludes with references to relevant sources and is available on Desklib, where students can find similar solved assignments and past papers.

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

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MEMO
To Mr. and Mrs. Sorter
Addresses
Date-
Dear Sir/ Madam
The income tax is the amount of tax payable by the individual on his earning to the
government. However, the government has issued tax slab rate for the individuals which
reflects the percentage of tax charged on the certain amount.
Each and every individual in Canada needs to report their total income for the
previous year in the assessment year. There are several deductions and tax allowances are
given by the government to them.
Each and every person who is having earning below $ 46605 is exempt to pay tax to
government. Individual having income more than $ 46605 will be liable to pay tax as per the
legal liabilities and laws (Nerudová, & Solilová, 2018).
Description of the payment of tax
Individual will be exempt to pay tax on his earning till $ 46605.
After that the tax will be charged @ 15% on his next $ 46605 earning.
After that rest of his income till following $ 46605 will be charged @ 20.5%.
Even after, if individual is having earning more than that, he will be charged with the
income tax rate of 29% on the next $61,353 (Nicholls, et al. 2018).
Rest of his/ her all income will be charged with the rate of 33% if total income
exceeds $205,842
 Ronald needs to pay income tax of $ 7,463.00 to government
 Rachel has to pay income tax of $ 55242 to government
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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
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Un-deducted contribution $
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
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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 $
2,800.00
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Running Head: Tax Computation of Individual
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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).
COMPUTATION OF THE TAX OF THE ROLAND
Calculation of Federal tax
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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
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REFERENCES
Lammam, C., Palacios, M., & MacIntyre, H. (2018). The Efiect on Canadian Families of
Changes to Federal Income Tax and CPP Payroll Tax.
Nerudová, D., & Solilová, V. (2018). Mandatory CCCTB implementation in the Eurozone
and its impact on corporate tax revenues in the Czech Republic. Economics and
Management.
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).
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