Tax Advice Memo: Analysis of Income Tax Return for Rosy Evans, 2019

This assignment presents a tax advice memo prepared for Rosy Evans, analyzing her 2019 income tax return. The memo details her total income, net income before adjustments, and tax liability, along with a discussion of her quarterly tax installments and net tax refund. It offers advice on tax implications, including deductions for dependent support, the benefits of RRSP contributions, and the tax-free savings account (TFSA). Furthermore, the memo addresses employment income considerations, such as company-provided leased cars and loans at concessional rates. It also touches upon the tax implications of stock options granted by a Canadian Controlled Private Corporation (CCPC). The memo provides a comprehensive overview of tax planning and compliance, offering practical advice for maximizing tax benefits and understanding various tax-related scenarios.

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

1
TAX
Memo
Dated: 19/04/2020.
To: Evans, Rosy.
From: (Student’s name), tax expert.
Sub: Advice on income tax return and other income related matters.
As per the income tax return of 2019 the total income of Rosy Evans is $81,895 for the year
ending on 31st December, 2019. Net income of her for the period before adjustments is $77,395.
The tax liability on taxable income for 2019 is $8,817.45. Rosy has already paid $12,000 as
quarterly tax instalments thus, net tax refundable to her in 2019 is $3,406.55.
Advice on tax implications:
For the medical expenditures incurred on Rose Evans (mother of Rosy) only $4,500 has been
allowed as deduction for disable dependant support and no other expenditures have been
considered since there is not enough information to show that all conditions have been complied
with by Rosy.
RRSP contributions are fully allowed as deduction hence, Rosy has failed to take advantage by
contributing in RRSP. Thus, if she would have contributed maximum amount allowed as
deduction in the fund her taxable income and income tax liability both would have been much
lower than what these are at present.
The executive MBA which the tax payer is expected to enrol in 2025 will allow her to deduct the
tuition fees for the course and eligible fees of the course from her income to determine taxable
income of her. Accordingly, the income tax liability of her will also reduce due to the same.

2
TAX
TSFA stands for Tax Free Savings Account and it allows residents of Canada to save in this
account by allowing tax free savings as well as tax free withdrawal. Thus, if the tax payer would
have invest in TSFA then the amount of investment is tax free as well as the withdrawal from the
account.
In case car is provided by the employer to the employee by lease and it is available for personal
use then proportionate lease amount and other operating costs incurred by the employer are to be
included in employment income of the employee. The car has ran a total of 2000 km out of
which merely 200 km was for employment purpose thus, 90% of the car was used for personal
purpose of the employee. Accordingly, 90% of total rental and operating costs related to the car
shall be added to the employment income of the employee. Hence, $12,510, i.e. 90% of total
expenditures related to the car, i.e. $13,900 will be added to determine the employment income
of the employee.
$3,250 shall be added to the employment income of the employee to whom the loan at
concessional rate has been provided by the employer. This is the difference in interests, i.e. the
amount of interest at prescribed rate and the amount of interest actually paid by the employee at
concessional rate.
In case ABC Ltd is a CCPC then there would not have been any tax implications for the stock
option granted to the employee.