AIT805 Ch 9 Assignment Problems-1

AIT805 Ch 9 Assignment Problems-1 - AIT805 Chapter 9...

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AIT805 Chapter 9 Selected Assignment Problems Problem 3 (Advanced) Diana Capriati, a Canadian resident for income tax purposes, has the following income for 2006 and 2007: 2006 2007 Income from employment Gross salary $120,000 $125,000 Less contribution to employer's RPP (1,500) (3,000) 118,500 122,000 Income from property Taxable dividends from a Canadian controlled private corporation 32,000 20,000 Gross-up 8,000 5,000 40,000 25,000 Bank interest received 3,000 5,000 43,000 30,000 Rental income—gross 25,000 30,000 Deductible rental expenses (18,000) (12,000) 50,000 48,000 Other income Alimony payments received 10,000 10,000 Loss from business Share of loss from partnership (30,000) (20,000) $148,500 $160,000 REQUIRED Based upon the information provided, determine the maximum RRSP contribution that Diana can deduct in 2008. Assume that Diana put $10,000 into her self-administered RRSP on February 12, 2009. Further assume that Diana was an active member of the partnership and that her pension adjustment for 2006 and 2007 was $3,000 and $6,000, respectively. She did not make an RRSP contribution for 2007. Solution 3 (Advanced) 2006 2007 2008 Earned income Salary $120,000 $125,000 Rental income 7,000 18,000 Alimony 10,000 10,000 Loss from partnership (30,000) (20,000) $107,000 $133,000 18% of earned income $ 19,260 $ 23,940 Unused RRSP deduction room: lesser of 1. RRSP limit $19,000 $20,000 2. 18% of prior year earned income 19,260 23,940 Therefore, unused RRSP deduction room 19,000 20,000 Pension adjustment ( 3,000) (6,000) Unused deduction from previous year 16,000 Unused deduction room available for the year (assuming that there was no RRSP contribution in the prior year) $16,000 $30,000 As per subsection 146(5), the maximum RRSP contribution that Diana can deduct for 2008 is the lesser of: (i) actual contribution within 60 days after year end $10,000 (ii) RRSP deduction limit $30,000 Therefore, the maximum RRSP deduction in 2008 taxation year is $10,000. 1
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Problem 8 (Advanced) [ITA: 5, 6, 8, 12, 20, 39, 40(2), 56, 60, 75, 146] Ms. Sui is an executive of a large public retail corporation, Clothes to You Ltd., situated in Dundas, Ontario. Ms. Sui is not married. However, she has two adopted children, ages 8 and 10, who reside with her. Ms. Sui has provided you with the following information for 2008: Clothes to You Ltd.: Gross salary. ........................................................................... $ 150,000 Commission income. .............................................................. 30,000 Canada Pension Plan contributions. ........................................ (2,049) Employment Insurance premiums. ......................................... (711) Registered pension plan contributions (money purchase). ...... (6,000) Income taxes deducted. ........................................................... (55,000) (1) Clothes to You Ltd. provides Ms. Sui with an automobile. The annual lease cost of the car, including PST and GST, is $18,400. Ms. Sui is reimbursed for her operating expenses when using the car for business. Clothes to
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This note was uploaded on 06/03/2009 for the course BUSINESS AIT 805 taught by Professor Shirenekhan during the Winter '09 term at Seneca.

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AIT805 Ch 9 Assignment Problems-1 - AIT805 Chapter 9...

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