BUS 345 Answers to Chp 2 Assignment Problems

BUS 345 Answers to Chp 2 Assignment Problems - Solution to...

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Solution to Assignment Problem Two - 1 Need For Instalments Instalments are required when an individual’s “net tax owing” exceeds $3,000 in the current year and in either of the two preceding years. In somewhat simplified terms, “net tax owing” is defined as the combined federal and provincial taxes payable, less amounts withheld under ITA 153. As Ms. Garond’s net tax owing in all three of the years 2005 through 2007 exceeds $3,000, she is clearly required to make instalment payments. Amounts The amount of the instalments could be based on the net tax owing for 2006 or 2007. In addition, the first two 2007 instalments could be based on the net tax owing for 2005, with the final two quarterly instalments based on the 2006 net tax owing. Given that the lowest net tax owing figure is 2007’s $4,150 ($14,000 - $9,850), use of this figure will give the lowest instalment payments. The quarterly payments would be $1,037.50 and are due on March 15, June 15, September 15, and December 15. Solution to Assignment Problem Two - 2 Note Although it is not covered in the text, it should be noted that ITA 155 provides special rules for individuals whose chief source of income is farming or fishing. The requirement here is that two-thirds of the estimated taxes payable for the current year (or the immediately preceding year) must be paid by December 31 of that year. An individual will be required to make quarterly instalment payments if the net tax owing is greater than $3,000 in: the current year; and either of the two preceding years. The quarterly payments are due on or before the 15th day of March, June, September, and December and would be based on either: the estimated net tax owing for the current year; or the net tax owing for the immediately preceding year. An individual can base the March 15 and June 15 instalments on the net tax owing for the second preceding year. For the September 15 and December 15 instalments, the payments would be calculated using the preceding year’s net tax owing, reduced by the total amount paid in the March 15 and June 15 instalments. As an alternative to calculating the instalments, individuals can make use of an administrative procedure provided by the
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BUS 345 Answers to Chp 2 Assignment Problems - Solution to...

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