Reference no: EM132726722
Small Wood is the president of Woodbine Inc., a Canadian Controlled Private Corporation. Small received remunerations and benefits from his employer during 2020 as follows.
Salary, gross..................................................................................... $ 100,000
Payroll deductions:
Income taxes .................................... $36,000
Registered Pension plan ............. 3,500
Canada Pension Plan premiums ...................... 2,749
Employment Insurance premiums.................... 860
Group accident disability insurance premiums........... 110
Total payroll deductions......................................................................( 39,719)
Net pay .................................................................................................. . $ 60,281
Additional Information
1. In November 2020, Small met with an accident and was unable to work for four weeks. During this period he received disability payments totaling $1,600 from Paris Life Insurance Ltd. Half of the disability insurance premiums were paid by Woodbine Inc. and half by Small (see payroll deduction above). Small has paid a total of $350 in disability insurance premiums since he commenced employment at Woodbine Inc. in 2017.
2. In 2020, Woodbine Inc. paid $424 (including HST) for the preparation of Small's 2019 income tax return and $530 (including HST) for Small to see a financial planning consultant regarding retirement planning.
3. Small is taking courses towards his M.B.A. degree on a part-time basis during the evening. He is taking the courses on his initiative and for his own benefit. During 2020, Woodbine Inc. paid for the tuition for these M.B.A. courses which amounted to $1,000. Woodbine Inc. also paid $400 in tuition for Small to attend a two-day computer workshop on company time to learn about the new software system that the company had just installed.
4. Director's fees of $2,000 were received by Small from Clint's Hi-Tech Ltd., a company owned by Small's spouse.
5. Birthday gift of $200 cash was received and was expensed by Woodbine Inc.
6. Small received an employee loan of $8,000 on January 15, 2020, at 1% interest to purchase a notebook computer for personal use. The interest was payable on each anniversary date of the loan, and Small paid the interest owing on the loan on the due date in 2021.
7. For 12 months, Woodbine Inc. paid Small a monthly gas allowance of $250 regardless of the number of kilometres He drove. In addition, He was provided with a company-owned automobile costing $38,500 (including HST) at the beginning of January. Small's kilometres for personal use were 16,000 out of a total of 25,000 kilometres. Operating costs paid (excluding gas) by Woodbine Inc. during 2020 amounted to $2,920, including insurance of $600 and HST.
8. Small and his spouse Clint were provided with Woodbine Inc.'s condo in the Bahamas for a one-week holiday during the winter. Excluding HST considerations, such accommodation during this peak period would have cost them $500 as opposed to the $100 actually paid by Small.
9. Small used his frequent-flyer points accumulated as a result of his business trips (which had been paid by Woodbine Inc.) for his holiday in the Bahamas. He saved $800, plus $104 of HST, by using the frequent-flyer points.
10. Small bought merchandise from Woodbine Inc. during the year and saved $180 (excluding HST of $23) using its 30% employee discount, which is available to all employees. Woodbine Inc.'s mark-up is 100%.
11. Small received Cash dividends from investment in common shares of Canadian resident public corporations of $24,000
12. Cash dividends received from common shares in US corporations (net of $3,000 of foreign withholding taxes; all in Canadian dollars) $17,000
13. Interest expenses paid during 2020:
a) Interest on bank line of credit used for investing in shares described above $18,000
b) Interest on loan to acquire an automobile for his daughter for her 18th birthday $3,200
c) Interest on a parcel of vacant land (purchased in 2015, the land does not generate any income) $4,000
Required:
Question A. Small would like you to calculate his Taxable income for 2020.
Question B. Small also would like to have an list showing items did not get any tax treatment
Question C. Make a list of items that are eligible for credits