Question

Jeffrey is a 25-year old full-time salaried AI engineer. He earned $85,000 in 2017, 10% more than he earned in the previous year in Calgary. Jeffrey moved to Montreal in 2017 to take up his new position at a cost of $7,000 (funded by a withdrawal from his TFSA). He has always contributed the maximum to his RRSP and TFSA. Jeffrey takes public transit to work at a cost of $960 a year and lives alone. His employer provides a medical plan at a premium of $1,200 a year. Other than the premium, Jeffrey’s only other medical cost in 2017 was a $5,000 dental bill. He pays the maximum contribution to Employment Insurance (EI), the Quebec Pension Plan (QPP) and the Quebec parental insurance plan (PPIP). He does not contribute to an employer pension plan.

Refer to the Federal Schedule 1 for residents of Quebec at https://www.canada.ca/en/revenue-agency/services/forms-publications/tax-packages-years/general-income-tax-benefit-package/quebec/5005-s1.html

Part a

What was Jeffrey’s taxable income in 2017 for Federal income tax purposes?

Part b

What amount could Jeffrey claim in total Federal non-refundable tax credits in 2017, excluding medical expenses?

Answer 1

Part-A Taxable income computation
Income
Salary           85,000
Less: Deductions
RRSP contribution 13909.0914
Maximum deduction least of the following
i)18% of earned income of previous year
Previous year income (85000*10/110)=77272.73
13909.0914
ii) maximum annual contribution limit

Moving expenses 960
Moving expenses deductible if you satisfy the following conditions
Condition 1:Moving in order to take up employment duties
Condition 2: residence is atleast 40 kms to your work place
Taxable income           70,131
Part -B
Step-1 Federal non-refundable tax credit
Basic Personal amount 11635
CPP or QPP contribution 2797.2
EIS 651.51
Quebec parental insurance plan 397.3
Public transit amount 480
Eligible from 1st Jan 2017 to 30th Jun 2017
960*6/12
Total Federal non refundable tax credits 15961.01