Part 1 (ITA 3)Division B Net Income to Division C Taxable Income to Taxes Payable for IndividualsITA 3(a)+ Bin # 1- Net Employment - losses carry forward 20 years and carry back 3 years (carrying baskets)+ Bin # 2 - Net Business & Property – losses carry forward 20 years and carry back 3 years (carrying baskets)+ Bin # 4 – Other IncomeITА 3 (b)+ Bin # 3 – Net Capital - losses carry forward for infinity and carry back 3 years (carrying basket)ITА 3 (c)Bin # 5 - Other Deductions= Sources of IncomeITА З (d)Losses in current year from Bins 1, 2, 4= Division B Net IncomeEquivalent to Capital Gains Deduction for Employee Stock OptionsITA 110Payments included to calculation Division B but not included for Division C (e.g. social assistance)Losses from other years (carrying baskets Bin #1 & 2)ITA 111Losses from other years (carrying basket Bin #3 limited to Net Capital Income included in ITA 3 (b))= Division C Taxable Incomex Applicable Tax RatesΙΤΑ 118Tax Credits= Division E Taxes Payable for Individuals Mr. O's employer requires him to use his own vehicle for work and pay all of thevehicle's operating costs. Mr. O. is not paid commissions.Mr. O. purchased a vehicle on July 1, 2020 for $37,290 including HST. Mr. O. drove thisvehicle 25,000 kilometers, of which 15,000 were for work. The capital cost allowance for2020 is $15,255. During the 6 months he owned vehicle he paid:bank loan interest $1,950gas and oilmaintenanceinsurance1,8403001,400100licence platesRequired: Calculate the amount Mr. O. can deduct from employment income. Show allcalculations.

Income is a residual amount left after netting of net expenses incurred to earn that income. The net…

Answered: insurance 1,400 licence plates 100…

insurance 1,400 licence plates 100 uired: Calculate the amount Mr. O. can deduct from employment income. Show al ilations

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

100%

Part 1 (ITA 3)
Division B Net Income to Division C Taxable Income to Taxes Payable for Individuals
ITA 3(a)
+ Bin # 1- Net Employment - losses carry forward 20 years and carry back 3 years (carrying baskets)
+ Bin # 2 - Net Business & Property – losses carry forward 20 years and carry back 3 years (carrying baskets)
+ Bin # 4 – Other Income
ITА 3 (b)
+ Bin # 3 – Net Capital - losses carry forward for infinity and carry back 3 years (carrying basket)
ITА 3 (c)
Bin # 5 - Other Deductions
= Sources of Income
ITА З (d)
Losses in current year from Bins 1, 2, 4
= Division B Net Income
Equivalent to Capital Gains Deduction for Employee Stock Options
ITA 110
Payments included to calculation Division B but not included for Division C (e.g. social assistance)
Losses from other years (carrying baskets Bin #1 & 2)
ITA 111
Losses from other years (carrying basket Bin #3 limited to Net Capital Income included in ITA 3 (b))
= Division C Taxable Income
x Applicable Tax Rates
ΙΤΑ 118
Tax Credits
= Division E Taxes Payable for Individuals

Mr. O's employer requires him to use his own vehicle for work and pay all of the
vehicle's operating costs. Mr. O. is not paid commissions.
Mr. O. purchased a vehicle on July 1, 2020 for $37,290 including HST. Mr. O. drove this
vehicle 25,000 kilometers, of which 15,000 were for work. The capital cost allowance for
2020 is $15,255. During the 6 months he owned vehicle he paid:
bank loan interest $1,950
gas and oil
maintenance
insurance
1,840
300
1,400
100
licence plates
Required: Calculate the amount Mr. O. can deduct from employment income. Show all
calculations.

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