Homework Help is Here – Start Your Trial Now!
Business
Accounting
Considering my financial situation and future plans, can you please compile a report which addresses the following; 1. The amount of tax I will pay to the CRA (without any contributions to RRSP or TFSA)

Considering my financial situation and future plans, can you please compile a report which addresses the following; 1. The amount of tax I will pay to the CRA (without any contributions to RRSP or TFSA)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
Please solve
John is a management consultant by profession, and he works as a freelance consultant for 3 prominent corporations in British Columbia. Following are some personal details of John Deacon 1. Full Name - John David Deacon 2. Date of birth - April 14th, 1990 3. Status in Canada – Canadian Citizen John is married to Rachel and the Deacon family has one child; Blake who is currently 3 months old. (Rachel is a housewife). For the year 2021, John recorded a total income of $125,794 and qualifies for both the federal and provincial tax credits (the federal basic personal amount $13,808 applied at a 15% tax rate, the provincial basic personal amount $11,070 applied at a 5.06% tax rate). Furthermore, John donated $9,250 to a church located in Langley, BC.( John plans to claim all donations to reduce his effective tax rate) John banks with the Royal Bank of Canada (RBC), in which he maintains a chequing and a savings account. On the day of filing tax John's bank details were as follows; Chequing account balance - $ 9,012 Savings account balance - $ 67,106
Transcribed Image Text:John is a management consultant by profession, and he works as a freelance consultant for 3 prominent corporations in British Columbia. Following are some personal details of John Deacon 1. Full Name - John David Deacon 2. Date of birth - April 14th, 1990 3. Status in Canada – Canadian Citizen John is married to Rachel and the Deacon family has one child; Blake who is currently 3 months old. (Rachel is a housewife). For the year 2021, John recorded a total income of $125,794 and qualifies for both the federal and provincial tax credits (the federal basic personal amount $13,808 applied at a 15% tax rate, the provincial basic personal amount $11,070 applied at a 5.06% tax rate). Furthermore, John donated $9,250 to a church located in Langley, BC.( John plans to claim all donations to reduce his effective tax rate) John banks with the Royal Bank of Canada (RBC), in which he maintains a chequing and a savings account. On the day of filing tax John's bank details were as follows; Chequing account balance - $ 9,012 Savings account balance - $ 67,106
The marginal tax rate for each tax bracket is as follows. 2021 Taxable Income So to $42,184 $42,184 to $49,020 $49,020 to $84,369 $84,369 to $96,866 $96,866 to $98,040 $98,040 to $117,623 $117,623 to $151,978 $151,978 to $159,483 $159,483 to $216,511| $216,511 to 222,420 $222,420 + 2021 Combined Marginal Tax Rate 20.06% 22.70% 28.20% 31.00% 32.79% 38.29% 40.70% 44.02% 46.12% 49.80% 53.50% Furthermore, John uses a visa credit card from RBC and his average spending per month amounts to $1,892. John currently lives on rent, and he plans to purchase his first apartment in the year 2027. Considering his forecasted income, he plans to purchase an apartment within a price range of $500,000 - $600,000 from the lower mainland. John is currently looking for options to grow his funds as well as defer his tax through low-risk investment options. (He expects his income to grow every year). Hence, he is looking for your advice. Now, John is considering two options for his former objective • Registered Retired Savings Plan (RRSP) • Tax-Free Savings Accounts (TFSA) John has an RRSP contribution limit of $11,200 and a TFSA contribution limit of $9,600 for 2021. Assume you are a financial consultant and you have received all the above information regarding John, and he wishes to clarify the following from you. An extract from his email to you is as follows; "To – Financial Consultant From – John Deacon Dear Financial Consultant, Considering my financial situation and future plans, can you please compile a report which addresses the following; 1. The amount of tax I will pay to the CRA (without any contributions to RRSP or TFSA)
Transcribed Image Text:The marginal tax rate for each tax bracket is as follows. 2021 Taxable Income So to $42,184 $42,184 to $49,020 $49,020 to $84,369 $84,369 to $96,866 $96,866 to $98,040 $98,040 to $117,623 $117,623 to $151,978 $151,978 to $159,483 $159,483 to $216,511| $216,511 to 222,420 $222,420 + 2021 Combined Marginal Tax Rate 20.06% 22.70% 28.20% 31.00% 32.79% 38.29% 40.70% 44.02% 46.12% 49.80% 53.50% Furthermore, John uses a visa credit card from RBC and his average spending per month amounts to $1,892. John currently lives on rent, and he plans to purchase his first apartment in the year 2027. Considering his forecasted income, he plans to purchase an apartment within a price range of $500,000 - $600,000 from the lower mainland. John is currently looking for options to grow his funds as well as defer his tax through low-risk investment options. (He expects his income to grow every year). Hence, he is looking for your advice. Now, John is considering two options for his former objective • Registered Retired Savings Plan (RRSP) • Tax-Free Savings Accounts (TFSA) John has an RRSP contribution limit of $11,200 and a TFSA contribution limit of $9,600 for 2021. Assume you are a financial consultant and you have received all the above information regarding John, and he wishes to clarify the following from you. An extract from his email to you is as follows; "To – Financial Consultant From – John Deacon Dear Financial Consultant, Considering my financial situation and future plans, can you please compile a report which addresses the following; 1. The amount of tax I will pay to the CRA (without any contributions to RRSP or TFSA)
Expert Solution
steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS