In a situation where she cannot make any use of the

in a situation where she cannot make any use of the medical expense credit. Given
this, Mr. Resso should claim the medical expenses, despite the fact that they will be
reduced by a larger figure than would have been the case if Mrs. Resso claimed them.
The transfer to Mr. Resso would be calculated as follows:
Credits Available For Transfer:
Age $ 7,494
Disability 8,416
Total Available $15,910
Reduced By Excess Of:
Mrs. Resso’s Net Income ($19,320)
Over Basic Personal Credit Amount 12,069 ( 7,251)
Available For Transfer To Mr. Resso $ 8,659
TIF Solution Eleven - 10
Test Item File Solutions for Canadian Tax Principles 2019 - 2020
S - 424

Since Mr. Resso has not applied for OAS, there can be no social benefits repayment. The
federal Tax Payable for Mr. Resso would be calculated as follows:
Tax On First $147,667 $ 30,535
Tax On Next $5,833
($153,500 - $147,667) At 29 Percent 1,692 $32,227
Tax Credits
Basic Personal ($12,069)
Spousal Including Infirm Amount
(Income Too High) Nil
Additional Caregiver Amount (Note 2) ( 2,554)
EI ( 860)
Canada Employment ( 1,222)
Age {$7,494 - [(15%)($153,500 - $37,790)]} Nil
Pension ( 2,000)
Medical Expenses (Note 3) ( 13,648)
Transfer From Spouse (Preceding Calculation) ( 8,659)
Credit Base ($40,012)
Rate 15% ( 6,152)
Federal Tax Payable - Mr. Resso $26,075
Note 2 Mrs. Resso's income is above the Canada caregiver income threshold of
$16,766. Given this, the additional Canada caregiver amount would be $2,554
($19,320 - $16,766).
Note 3 The allowable medical expenses would be calculated as follows:
Medical Expenses $16,000
Reduced By The Lesser Of:
•
[(3%)($153,500)] = $4,605
•
2019 Threshold Amount = $2,352 ( 2,352)
Allowable Medical Expenses $13,648
Part B - Eligibility For Transfer
Mr. Resso's current base for the spousal credit is nil. If Mrs. Resso's dividends are transferred,
she would be left with Net Income For Tax Purposes of nil, resulting in Mr. Resso being eligible
for the full spousal tax credit. As this is an increase from the previous amount, the transfer is
permitted.
Part C
If Mrs. Resso’s dividends are transferred to Mr. Resso, their new Taxable Income figures would
be calculated as follows:
Mrs. Resso Mr. Resso
Net Income Before Clawback As Per Part A $19,320 $153,500
Dividend Transfer ( 14,000) 14,000
Gross Up Transfer ( 5,320) 5,320
Net And Taxable Income After Dividend Transfer Nil $172,820
TIF Solution Eleven - 10
Test Item File Solutions for Canadian Tax Principles 2019 - 2020
S - 425

The transfer to Mr. Resso would be calculated as follows:
Credits Available For Transfer:
Age $ 7,494
Disability 8,416
Total Available $15,910
Reduced By Excess Of:
Mrs. Resso’s Net Income Nil
Over Basic Personal Credit Amount 12,069 ( Nil)
Available For Transfer To Mr. Resso $15,910
With respect to Mr. Resso, his federal Tax Payable would be calculated as follows:
Tax On First $147,667 $30,535
Tax On Next $25,153
($172,820 - $147,667) At 29 Percent 7,294 $37,829
Tax Credits
Basic Personal ($12,069)
Spousal Including Infirm Amount
($12,069 + $2,230) ( 14,299)
Additional Caregiver Amount (Note 4) ( Nil)
EI ( 860)
Canada Employment ( 1,222)
Age {$7,494 - [(15%)($153,500 - $37,790)]} Nil
Pension ( 2,000)
Medical Expenses (Note 3) ( 13,648)
Transfer From Spouse (Preceding Calculation) ( 15,910)
Credit Base ($60,008)
Rate 15% ( 9,001)
Dividend Tax Credit [(6/11)($5,320)] ( 2,902)
Federal Tax Payable - Mr. Resso $25,926
Note 4 The spousal credit for Mrs. Resso is larger than the $7,140 Canada caregiver
amount. Given this, the additional Canada caregiver amount would be nil.