Required: Calculate your 2020 net employment income net property income net other income and deductions
You are an employee of a large public company, with an annual salary of $75,000. Last year (2019) your supervisor awarded you a bonus of $19,500. You received the bonus with your February 27, 2020 pay. Traveling is part of your job, and your employer provides you with a leased car. You drove the car a total of 43,360 kilometers and all but 8,240 kilometers were for work. The company pays $560 a month (HST is included in this amount) for your car lease and paid $6,300 in 2020 to maintain the car. You had the car available to you for 11 months because you took your one-month vacation. In compliance with company policy, you parked the car in the company’s garage and gave your supervisor the car keys.
You are divorced at the age of 30 and a single parent of two children, one aged 6 and the other aged 8. Your children do not have any income of their own in 2020. In 2018 the divorce court judge decided your former spouse must pay you $36,000 a year for child support, plus $1,000 spousal support each month. This 2020 calendar year, your former spouse has paid a total of $40,000 of these required court ordered amounts.
Your healthy and vibrant 87-year-old grandfather lives with you and the children. Grandpa’s 2020 income was only $7,950, so Grandpa depends on you financially.
Your T4 indicates that these amounts were deducted from your salary:
RPP Contributions $3,400
EI Premiums 856
CPP Contributions 2,898
Your company asked if you would transfer from the Oshawa branch to the Ottawa branch. You agree to the transfer. The company said it will compensate you for the loss on the sale of your Oshawa house, and give you a $10,000 allowance to cover the cost of moving but will not pay for the legal fees associated with buying and selling houses. In addition, because you are a single parent your supervisor arranged with the Human Resources Department to provide you a $200,000 interest free housing loan to help with the Ottawa house purchase. You received the loan on April 1, 2020 and must repay it on December 31, 2025.
Early in February 2020, you fly to Ottawa to look for a new house. The flight cost $325 and your hotel room and meals cost a total $575. You submit an expense claim and these costs were reimbursed to you by the company. You put an offer on a house in Ottawa and it is accepted. Your house in Oshawa sells later that month for $257,800, however you paid $265,000 for it. A lawyer charges you $950 to complete the sale of your Oshawa home.
Your Oshawa house sale closes on March 15 and you, the children and your grandfather drive to Ottawa using your company car. You pack a picnic lunch for the trip, stopping in Kingston to enjoy the water and the picnic. This trip is considered employment related. The new house in Ottawa will not be available until April 3rd so all of you stay in an Ottawa hotel from March 15th through April 3rd (19 days). The rate for the two-room suite is $325 a day. You have a discount coupon so you only have to pay $200 a day for seven nights of the stay. The remaining 12 nights you pay full price. CRA’s 2020 rate for meals is $51 a day per person. The movers charge you $3,640 to move your household items and the lawyer charges you $600 to close the deal on the Ottawa home.
In July 2020 when your employer’s company shares were trading for $10.50 you purchased 1260 shares through your employee stock option. The stock option was granted to you three years ago when the company shares were trading for $3.25 and at that time the option allowed you to purchase the shares for $5.00. At the end of the year, the shares paid you an eligible dividend of 30 cents a share!
On January 1, 2020, you purchase an annuity for $28,733. The annuity was purchased with after-tax money and provides a payment of $5,000 at the end of each year for eight years. The effective yield on the annuity is 8 percent. Also during 2020, you contribute $6,000 to your Tax Free Savings Account (TFSA) and $5,500 to a TFSA that you have opened in your grandfather’s name.
Before moving to Ottawa, childcare costs in Oshawa were $200 per week for 11 weeks. In Ottawa, the weekly cost increased to $250 per week and was paid for a total of 36 weeks. During the summer, both children spent four weeks at an exclusive summer camp. The fees at this camp were $500 for each child per week.
Assume a prescribed rate of 2 percent during all four quarters of 2020.
Required: Calculate your 2020
- net employment income
- net property income
- net other income and deductions
- Net Income (Division B)
- Taxable Income (Division C)
- Dividend Tax Credit
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