CHAPTER SIX SOLUTIONS - CHAPTER SIX SOLUTIONS Solution to...

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CHAPTER SIX SOLUTIONS Solution to Assignment Problem Six - 1 The amount of the personal tax credits would be as follows: 1. Ms. Smith will qualify for the following credits: Basic Personal Amount $ 8,929 Spousal [$8,929 - $3,750) 5,179 Total Credit Base $14,108 Rate 15.5% Total Credits $ 2,187 There is no tax credit available for her son. 2. Ms. Finkly will qualify for the following credits: Basic Personal Amount $ 8,929 Spousal 8,929 Age 5,177 Pension 2,000 Spouse’s Disability 6,890 Total Credit Base $31,925 Rate 15.5% Total Credits $ 4,948 As Ms. Finkly’s Net Income For Tax Purposes is less than $30,936, there will be no reduction in her age credit. 3. Mr. Saladin will qualify for the following credits: Basic Personal Amount $ 8,929 Spousal 8,929 Child (13 Year Old And 15 Year Old) 4,000 Caregiver (20 Year Old Child) 4,019 Total Credit Base $25,877 Rate 15.5% Total Credits $ 4,011 4. Mr. Renaud will qualify for the following credits: Basic Personal Amount $ 8,929 Child [(3)($2,000)] 6,000 Eligible Dependant (Any Child) 8,929 Total Credit Base $23,858 Rate 15.5% Total Credits $ 3,698
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5. Ms. Hill will qualify for the following credit: Basic Personal Amount $ 8,929 EI (Maximum) 720 CPP (Maximum) 1,990 Canada Employment 1,000 Total Credit Base $12,639 Rate 15.5% Total Credits $ 1,959 Her husband’s income will have to be considered for the entire year and, with him having a total of $36,000 ($33,000 + $3,000), the spousal credit will be eliminated. 6. Mr. Rajit will qualify for the following credits: Basic Personal Amount $ 8,929 Eligible Dependant (Son) 8,929 Child - Son 2,000 Caregiver [$4,019 - ($14,500 - $13,726)] 3,245 Total Credit Base $23,103 Rate 15.5% Total Credits $ 3,581
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Solution to Assignment Problem Six - 2 Case A The solution to this Case can be completed as follows: Tax [$5,763 + (22%)($46,000 - $37,178)] $7,704 Basic Personal Amount ($ 8,929) Spousal ($8,929 - $8,800) ( 129) EI ( 720) CPP ( 1,990) Canada Employment ( 1,000) Caregiver [$4,019 - ($14,000 - $13,726)] ( 3,745) Credit Base ($16,513) Rate 15.5% ( 2,560) Federal Tax Payable $5,144 Mr. Norris would claim the caregiver credit for Bernice since Susan would have no Tax Payable. Case B The solution to this Case can be completed as follows: Tax [$5,763 + (22%)($46,000 - $37,178)] $7,704 Basic Personal Amount ($ 8,929) Spousal ($8,929 - $4,410) ( 4,519) Child ( 2,000) EI ( 720) CPP ( 1,990) Canada Employment ( 1,000) Medical Expenses [$3,150 - (3%)($46,000)] ( 1,770) Credit Base ($20,928) Rate 15.5% ( 3,244) Federal Tax Payable $ 4,460 Case C The solution to this Case can be completed as follows: Tax [$5,763 + (22%)($46,000 - $37,178)] $7,704
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