Analysis of Income Tax Return - University of XYZ - Semester 1

This assignment analyzes an income tax return, focusing on the various components affecting an individual's tax liability. The analysis includes examination of deductions, such as those related to medical expenses and RRSP contributions, as well as the impact of car benefits and loans at concessional rates on taxable income. The assignment also explores the implications of a tax-free savings account (TFSA) and a long-life learning plan on tax planning. The analysis highlights how specific financial decisions and circumstances, such as employment-related car usage and company stock options, influence the final tax payable. Furthermore, the assignment offers a detailed breakdown of the calculations involved in determining the taxable income and the final tax liability, providing a comprehensive understanding of the Canadian income tax system. The document also highlights the importance of understanding the relevant tax regulations and the impact of various financial decisions on tax outcomes.

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

1
TAX
Memo
Date: 19th April, 2020.
To: Rosy Evans
From: (Name of the student).
Sub: Income tax return file along with discussion on certain tax related matters.
As per the income tax return file it is clear that your total income for 2019 is $81,895 and net
income is $77,395 after deducting disability support deduction of $4,500 for your dependant
mother. Considering that the quarterly tax instalment paid for the year is $12,000 along with
$224 as climate action incentive the net tax refundable for the year is $3,406.55.
Medical disability amount:
Not all medical amount incurred on the disable and dependant mother of Rosy are allowed as
deduction. Instead a standard deduction of $4,500 has been taken as to take item wise deduction
for each amount paid for the medical expenses of Rose Evans needed strict compliance with
number of provisions of income tax act in Canada. Considering the lack of information it was not
possible to determine whether those provisions have been complied by Rosy. Hence, only
disability support deduction has been considered in income tax return of Rosy Evans.
RRSP Contribution:
RRSP contributions are tax deductible hence, such contributions would have resulted in
reduction of taxable amount and resultant tax liability. Thus, with maximum amount of RRSP
contribution Rosy could have reduced her net taxable income and resultant income tax liability
proportionately.

2
TAX
Long life learning plan:
Tuition fees paid on learning programs are allowed as deduction for computation of taxable
income. Thus, the plan of executive MBA in 2025 will help Rosy to reduce her net income and
resultant income tax liability.
TSFA:
Tax savings free account allows the residents of Canada to take tax advantage as the gain on
TSFA account is not liable to tax. Also the withdrawals from such account is also tax free hence,
Rosy could use the account to increase her savings in the future as well as to reduce her income
tax liability.
Car benefit:
In case the car was provided for entire year then $11,400 (950 x 12) will be added along with
operating cost of $2500 to calculate the taxable income of Rosy. However, it is important to note
that such additions will be made if the car has been provided exclusively for the personal use of
Rosy. Thus, in case the car was only used for the employment purpose then no amount shall be
added in the income tax return of Rosy to compute her taxable income and resultant income tax
liability.
In this case since only 200 km out 2000 km has been used for employment purpose hence,
(11400 x 1800/2000) + (2500 x 1800/200) = $12510 shall be added to the employment income
of Rosy to determine her taxable income and resultant tax liability.
Loan at concessional rate:

3
TAX
Amount to be added to Rosy’ employment income is $3250 {(100000 x 3% x 1/12) + (100000 x
4% x 9/12)}. This is the difference of interest between prescribed rate and the rate charged by the
employer.
ABC Ltd a CCPC:
In that case the stock option would not have resulted in any increase to the taxable income of
Rosy.