Question

Stuart Planter is a full-time teacher, and he lives in the country with his family. Stuart farms on a part-time basis. Stuart earned $85,000 in 20x6 at his full-time teaching job. During 20x6 he also incurred farm revenues totaling $8,000 and farm expenses totaling $5,000. He has also provided the following additional information: • He has rental properties which has the following information: o Rental property located at 5830 Queen Mary Road in Montreal:  5 condos  Rent per months 2000$ per unit  Mortgage of 1200$ per months ( 600$ capital and 600$ interest)  Snow removal 1000$ for the winter season  Common area cleaning 500$ per month  Janitor salaries 5000$  Municipal and school taxes 4500$ He also received a T2202A from McGill University for tuitions paid of 15000$ for 8 months part-time. Mike has 6500$ unused tuitions fees appearing on his 2017 notice of reassessment. Mike does not like to pay taxes • Sold 100 shares of Apple on 30 November 2018 at 150$ per shares. The shares he inherited from his late father were purchased in January 2000 at 55$ per shares. • Stuart had the following amounts deducted from his pay during the year: CPP and EI of $3,609 and income tax of $19,000. • Stuart's wife works full-time and earns $68,000 a year. • Stuart had extensive dental work done in 20x6. The total cost was $2,200 and Stuart did not receive any reimbursement for the cost. Required: A) Using tax rates and amounts applicable for 2019, calculate the following: 1. Calculate Stuart's net income for tax purposes for 20x6 in accordance with Section 3 of the Income Tax Act. 2. Calculate Stuart's taxable income for 20x6. 3. Calculate Stuart's minimum federal tax liability for 20x6.

Answer 1

Stuart's net income for tax purposes for 20x6 in accordance with Section 3 of the Income Tax Act.

ITA 3(a) Employment income		$ 85,000
Non-eligible dividend		$ 1,150
ITA 3(d) Restricted farm loss $2,500 + 50% ($4,000 - $2,500)		$ -3,250
ITA 3 Net Income for Tax		$ 82,900

-------------------------------

-------------------------------