ACCT 2301 Taxation Project: Computing Income, Liabilities and Advice

This project focuses on computing the income and tax liabilities for Steve and Brenda, providing tax planning advice to minimize their tax obligations. The project details Steve's salary, bonus, contributions, and benefits, along with long-term capital gains and rental income. It also covers Brenda's business income, capital gains, and specific deductions. The federal tax owing is calculated for both individuals, and recommendations are provided, including maintaining receipts, using vehicle log books, paying salaries to reduce business profit, investing in tax-deductible schemes, maintaining proper books of accounts, and maximizing contributions to registered retirement funds. Notes clarify the treatment of expenditures, business expenses, contributions, tuition fees, and charitable contributions in the calculations.

Running head: TAXATION
Taxation
Name of the Student:
Name of the University:
Authors Note:

1
TAXATION
Contents
Part 1:...............................................................................................................................................2
Part 2:...............................................................................................................................................6
Part 3:...............................................................................................................................................8
Part 4:.............................................................................................................................................19
Notes:.............................................................................................................................................20
References:....................................................................................................................................22

2
TAXATION
Part 1:
All amounts are in CAD:
Income of Steve
Particulars Amount ($) Amount ($)
Salary 93,000.00
Bonus 18,000.00
CPP contributions (2,564.00)
El Contributions (836.00)
Charitable deductions (720.00)
Registered retirement contribution (6,400.00)
Health and dental coverage paid by employer
taxable
800.00
Disability insurance exempt
Life insurance paid by the employer is taxable 1,020.00
Tuition payment for photography is taxable 3,500.00
Partial travelling expenses (8550 x 50%) (4,425.00)
Work related expenses

3
TAXATION
Air fare (3,700.00)
Accommodation (5,720.00)
Meals (3,380.00)
Christmas gifts to customers allowed (1,600.00)
Taxable income from salary 86,975.00
Long term capital gain 217,500.00
Taxable rental income 23,303.36
Income from RRSP is tax exempt
Contribution to RRSP 13,000.00
Adjusted gross income 340,778.36
Less: Specific deductions
Medical expenses 490.00
Contribution to charity 1,200.00
Babysitting expenses except for date night (4500
+3500)
8,250.00
Sci-Fi camp expenses allowed 2,475.00

4
TAXATION
12,415.00
Net income 328,363.36
(Li, Magee &
Wilkie, 2017)
Net income Brenda
Particulars Amount Amount Amount
Revenue 581,000.
00
Profit on sale of C1 building (135000 -40000) 95,000.
00
Loss on sale of delivery van (4500 - 6175) (1,675.
00)
674,325.
00
Less:
General expenses 398,250.
00

5
TAXATION
Amortization on fixed assets 35,810.
00
Amortization on client list
(32000/10)
3,200.
00
437,260.
00
Income from business 237,065.
00
Income from capital gain (120000 -75000) 45,000.
00
Income from capital gains (partnership) 1,125.
00
Income from interest (Partnership) 1,125.
00
Adjusted gross income 284,315.
00
Less: Deductions specific
Food and clothing expenses is not allowed as deduction
Medical expenses 18,805.

6
TAXATION
00
Contribution to registered charities 1,900.
00
20,705.
00
Net income 263,610.
00 (Tanzi,
2014)
Part 2:
Federal tax owing from Steve
On first $46,,605 @15% 6,990
.75
From $46606 to $93208 @20.5% 9,553
.62
From $93208 to $144489 @26% 13,333
.06
From $144489 to $205482 @29% 17,792
.37
29,877.43

7
TAXATION
Above @205842 @33% 40,431
.93
Federal tax owing from Steve 88,101.73
Federal tax owing from Brenda
On first $46,,605 @15% 6,990.75
From $46606 to $93208 @20.5% 9,553.62
From $93208 to $144489 @26% 13,333.06
From $144489 to $205482 @29% 17,792.37
Above @205842 @33% 19,063.44
Federal tax owing from Brenda 66,733.
24
Part 3:
Income of Steve
Particulars Amount
($)
Amount
($)
Salary 93,000

8
TAXATION
.00
Bonus 18,000
.00
CPP contributions (2,564.
00)
El Contributions (836
.00)
Charitable deductions (720
.00)
Registered retirement contribution (6,400.
00)
Health and dental coverage paid by employer
taxable
80
0.00
Disability insurance exempt
Life insurance paid by the employer is taxable 1,020
.00
Tuition payment for photography is taxable 3,500
.00
Partial travelling expenses (8550 x 50%) (4,425.

9
TAXATION
00)
Work related expenses
Air fare (3,700.
00)
Accommodation (5,720.
00)
Meals (3,380.
00)
Christmas gifts to customers allowed (1,600.
00)
Taxable income from salary 86,975.
00
Long term capital gain 217,500.
00
Taxable rental income 23,303.
36
Income from RRSP is tax exempt
Contribution to RRSP 13,000.

10
TAXATION
00
Adjusted gross income 340,778.
36
Less: Specific deductions
Medical expenses 49
0.00
Contribution to charity 1,200
.00
Babysitting expenses except for date night (4500
+3500)
8,250
.00
Sci-Fi camp expenses allowed 2,475
.00
12,415.
00
Net income 328,363.
36
Federal tax owing from Steve
On first $46,,605 @15% 6,990

11
TAXATION
.75
From $46606 to $93208 @20.5% 9,553
.62
From $93208 to $144489 @26% 13,333
.06
From $144489 to $205482 @29% 17,792
.37
29,877.
43
Above @205842 @33% 40,431
.93
Federal tax owing from Steve 88,101.
73
(Azémar
&
Hubbard,
2015)
Schedules:
Notes and schedules:
Capital gain of Steve