Taxation Week 4, 5, and 6 Practice Problems and Solutions

This document provides comprehensive solutions to taxation practice problems from Weeks 4, 5, and 6, covering various aspects of Canadian taxation. The solutions include detailed calculations for personal and corporate income tax, addressing topics such as taxable income, deductions, capital gains, and related party transactions. The assignment also explores the tax implications of incorporating a business and analyzes scenarios involving shareholder relationships, charitable donations, and dividend income. Each solution provides step-by-step explanations, ensuring a clear understanding of the tax principles and calculations involved. This assignment is designed to help students master key taxation concepts and prepare for assessments.

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

1TAXATION
Question 1
a)
shares $5000
interest $50000
lottery $ 100,000
taxable 155000
b)
38% * 155000 = 58900
c)
the RRSP limit is18% with an excess amount of $ 26500
d)
sale of vacant land is better to be treated as Capital income as that of business income is
because the rates are less.
Question 2
a) Net income for the year
Income from business $250000
Income from interest $10000
Surplus operating case $2000

2TAXATION
Taxable Capital Gain $5000
Total $267000
b) Taxable income for the year
Taxable income is to computed by deducting the deductions from the net income that is
$267000.
Deductions = 10000 + 4500 + 4000
Total Taxable Income = 248500
c) Active business income
$250000 + $2000
= $252000
d) Amount of aggregate investment income
$ 2000 + $ 7000 = $ 9000
e) Federal part I tax payable for the year
38% of 252000 = $95760
f) Federal part IV tax payable for the year
33.33% of 252000 = 83991
g) Refundable portion of Part I tax for the year
33.33% of 252000 = 83991
h) Refundable dividend tax on hand for the year

3TAXATION
38% of 252000 = $95760
i) Amount of any dividend refund for the year
$4000