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 $1,950gas and oil 1,840maintenance 300insurance 1,400licence plates 100 Calculate the amount Mr. O. can deduct from employment income. Show all calculations. Part 1 (ITA 3)Division B Net Income to Division C Taxable Income to Taxes Payable for IndividualsITА 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)IТА З (c)- Bin # 5 - Other Deductions= Sources of IncomeITA 3 (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

Tax is the liability which has to be paid by the individual and the corporation to the Federal…

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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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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 1,840
maintenance 300
insurance 1,400
licence plates 100

Calculate the amount Mr. O. can deduct from employment income. Show all calculations.

Part 1 (ITA 3)
Division B Net Income to Division C Taxable Income to Taxes Payable for Individuals
ITА 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)
IТА З (c)
- Bin # 5 - Other Deductions
= Sources of Income
ITA 3 (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

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