Taxation Law

Question 1

Matilda Bertrand is single. At the beginning of 2019, Matilda Bertrand has a carry forward of a tuition tax credit from 2018 of $3,000 [(15%) ($20,000)]. During 2019, Matilda Bertrand attends college for 7 months. Her total tuition for the year, including allowable ancillary fees, is $7,500, of which she prepaid $1,500 in 2018. Interest paid for the year on her student loan was $580. On July 2, 2019, Ms. Bertrand began employment with Northern Mining Ltd. (NML). She received $60,000 salary for the year. NML withheld the following amounts from her earnings: Federal and Provincial Income Tax, $16,800 Employment Insurance Premiums, $860 CPP Contributions, $2,749 No other personal tax credits are available other than her own personal tax credit.

Requirements:

1. Calculate the federal tax payable of Ms. Bertrand without regard to the taxes withheld.

2. Determine the total amount of education related tax credits that would be available for carry forward or transfer.

Question 2

Dr. Marquez is a dentist with awell-practice in North York,Toronto, Ontario. She has sought y our adviceregarding the deductibility/taxabilityof thefollowing expenditures and income items identified duringthe current taxation year:

1. Insurance payments Included a $1,650 premium for coverage of her office and contents, $3,800 for malpractice coverage, and $2,100 in life insurance premiums.

2. Payments were made to a collection agency in the amount of $1,375 for assi stance in collecting pastdue amounts from patients.

3. Contributions of $1,000 were made to various registered charities.

4. Dr. Marquez paid a total of $21,0 00 to her husband for hisser vices a s a full-time bookkeeper and receptionist.

5. A total of $5,300 was spent to attend a dental convention in Chicago, Illinois. Dr. Marquez was accompanied by her husband and $1,750 of the total cost of the trip relates directly to him.

6. Anamountof $1,200 was paid for membership in a racquets club. In addition, $1,600 wasspent for court time, approximately 40 percent of which wasfor timespent playing withpatients.

7. Dr. Marquez paid $1,800 in legal and accounting fees. These fees related to objecting to a personal income tax reassesment fora previous tax year. The objection was not successful and, as a consequence, Dr. Marquez was required to pay additional taxes of $17,900, plus $1,710 in interest on the late payments.

8. Dr. Marquez purchased the building in which her practice is located in 2005. Her practice uses 50 percent of the floor space in the building and, on January 1, 2019 the Class 1 UCC for the building is $575,000.

9. Dr. Marquez’ late father was an amateur painter who didn’t sell a single painting while he was alive. He gave Dr. Marquez a number of his paintings over the years. Shortly after his death, he was “discovered” and his paintings were in demand. During 2019, she sold two of his large paintings for $10,000 each. The electrician doing the renovations in the building fell in love with one of his other paintings. The electrician offered to trade $10,000 in services for it and Dr. Marquez accepted the offer.

10. During the year, Dr. Marquez spent $3,300 purchasing provincial lottery tickets.

Required: Advise Dr. Marquezwithrespect to the deductibility/taxability of the preceding expenditures and income in the calculation of NetIncomeforTaxPurposes. Explain your position oneach expenditure or income item.