Final Exam Review Questions

Contents
Deduction from Business Income: Automobile Expenses............................................................................2
Deduction from Business Income: CCA Expenses........................................................................................2
Deduction from Business Income: Home Office expenses..........................................................................5
Calculating Net Income for tax Purposes Using the Ordering Rules............................................................6
Employment income: auto provided by employer (owned)........................................................................6
Employment income: auto provided by employer (leased).........................................................................6
Employment income: loan provided by employer.......................................................................................7
Calculation Of Tax Payable Before Credits...................................................................................................7
Infirm Spousal Tax Credit)...........................................................................................................................7
Canada Caregiver Tax Credit........................................................................................................................7
Infirm Spouse And Infirm Child....................................................................................................................8
Canada Caregiver Tax Credit - Additional Amount......................................................................................8
Age Tax Credit.............................................................................................................................................8
Transfer Of Tuition Credit............................................................................................................................8
Education Related Tax Credits.....................................................................................................................8
Charitable Donations Tax Credit Carry Forward..........................................................................................9
Medical Expense Tax Credit.........................................................................................................................9
Deduction from Business Income: Automobile Expenses
Julio Gonzalez uses an automobile in his unincorporated business.  It cost $45,000
in 2018, with maximum CCA being deducted in that year.  The purchase was
financed with a bank loan of $40,000.  For 2019, the interest on this loan was
$4,970.  The automobile is driven 100% for business purposes, with the 2019
operating costs totaling $6,275.  In determining his 2019 business income, what
can he deduct for business use of the automobile?

Deduction from Business Income: CCA Expenses

1. On August 11, 2019 ABC Publishing Company purchased a MacBook Pro
computer for $2,800 and application software for $900.  The maximum CCA
deduction for 2019 is:
2. During 2019 Desiderata Design Corp. purchased a new BMW for $48,000.
The car is used exclusively for business use.    The maximum CCA deduction
for 2019 is:
3. Nestor Nerd paid $4,000 to purchase various computer applications
software for his sole proprietorship, Nerd01 on April 1, 2019.  Nerd01 has a
December 31 year end and has been operating for 3 years.  What is the
maximum tax deduction that Nerd01 can claim on the software for the
current year?
Deduction from Business Income: Home Office expenses
Octavia Russell is a successful self-employed bookkeeper. She meets all of her
clients in her office in the basement of her home.  The office is 300 square feet
and the house is 2,000 square feet. She incurred the following costs during the
current year:

House insurance $900

Office supplies 450
House utilities 2,200
Business liability insurance 300
Mortgage interest 5,000
Property tax 4,200
House repairs and maintenance 8,000

What is the amount of the above expenses deductible from her business
income?
Calculating Net Income for tax Purposes Using the Ordering Rules
Harvey Nicastro has current year net employment income of $45,000.  In addition, he has the following additional
sources of income, gains, and losses:
 A loss from an unincorporated business of $23,000.
 Interest income of $4,500.
 A taxable capital gain of $13,500.
 An allowable capital loss of $18,200.
 Spousal support paid of $24,000.
 A net rental loss of $14,500.
Determine Harvey’s minimum Net Income For Tax Purposes for the current year and indicate the amount and type
of any loss carry overs that are available at the end of the year.  Show all of your calculations.

Employment income: auto provided by employer (owned)

Mr. Robert Rhodes is provided with an automobile that is owned by his employer.  The car was acquired by the
employer in 2017 for $63,000, plus $3,150 in GST.  During 2019, it was used by Mr. Rhodes for 8 months.  When
not using the automobile, the employer required that Mr. Rhodes return it to their premises.  His total milage in 2019
was 53,000 kilometers, of which 22,000 were employment related.  Calculate Mr. Rhodes’ minimum taxable benefit
for the use of the automobile.

Employment income: auto provided by employer (leased)

Ms. Sarah Wexler is provided with a car by her employer.  It is leased by the employer for $728 per month,
including $78 of HST.  The lease payment also includes a payment of $50 per month to cover insuring the vehicle.
During 2019, Ms. Wexler uses the car for 10 months.   During the other 2 months, the employer requires that it be
returned to their premises.  She drives the car 76,000 kilometers during this period, of which 23,000 are for personal
use.  Calculate Ms. Wexler’s minimum taxable benefit for the use of the automobile.
Employment income: loan provided by employer
On January 1, 2019, Mr. Packard receives a $135,000 loan from his employer to assist him in purchasing a home.
The loan requires annual interest at a rate of 3.1 percent, which he pays on December 31, 2019.  Assume that the
relevant prescribed rate is 5 percent during the first quarter of 2019, 6 percent during the second quarter, and 4
percent during the remainder of the year.  What is the amount of Mr. Packard’s taxable benefit on this loan for the
year?

Calculation Of Tax Payable Before Credits

During 2019, Canadian resident Mark Forbes has calculated his Taxable Income to be $53,175.  Calculate
his 2019 federal Tax Payable before consideration of credits

Infirm Spousal Tax Credit)

Mr. Don Deloran has 2019 Net Income For Tax Purposes of $26,100.  His spouse is dependent on him because of a
physical infirmity.  The infirmity is not sufficient to qualify for the disability tax credit.  She has 2019 Net Income
For Tax Purposes of $5,800.  Mr. Deloran has no tax credits other than the basic personal credits for his spouse and
himself.  Determine Mr. Deloran’s federal tax credits for 2019.

Canada Caregiver Tax Credit

Elaine Markham lives with her husband and 11 year old daughter.  Her husband’s income is less than the basic
personal tax credit amount.  Her 81 year old mother also lives with the family.  While her mother has 2019
investment income of $10,000, she has a physical infirmity that makes her dependent on Elaine.  Determine the
amount of Elaine’s Canada caregiver tax credit, if any, for 2019.
Infirm Spouse And Infirm Child
Margo Riche is married to John Riche.  John has a mental infirmity.  They have a 22 year old daughter who has a
physical infirmity.  Neither infirmity is severe enough to qualify for the disability tax credit.  John has 2019 Net
Income For Tax Purposes of $6,600.  Their daughter has no 2019 income.  Determine the amount of any 2019 tax
credits that Margo will have related to her spouse and daughter.

Canada Caregiver Tax Credit - Additional Amount

Toshiro Mifune is single and lives with his 62 year old mother, Anna Mifune.  Anna has a physical infirmity which
makes her dependent on Toshiro.  It is not, however, severe enough to qualify for the disability tax credit.  Anna has
2019 Net Income For Tax Purposes of $18,300.  Determine the amount of 2019 tax credits that Toshiro will have
related to his mother.

Age Tax Credit

Ms. Marlene Burns is 69 years old and has 2019 Net Income For Tax Purposes of $46,642.  Determine Ms. Burns’
age credit for 2019.

Transfer Of Tuition Credit

Carl Bond is a student at the University of Michigan in the U.S. on a full time basis during 2019.  His tuition fees
total $31,400 (Canadian dollars).  For 2019, he has Taxable Income of $14,000.  Other than his tuition credit, his
only tax credit is the basic personal credit.  Determine Carl’s tuition credit and indicate how much of this total could
be transferred to a supporting parent and how much would be carried forward.

Education Related Tax Credits

During 2019, Frank Balmer attends university for 5 months.  His total tuition for the year, including all
ancillary fees, is $4,100, of which he prepaid $1,400 in 2018.  The amount paid in 2019 includes $415 in
fees that are only charged to students in his biology program.  Interest paid for the year on his student
loan was $417.  Determine the total amount of education related tax credits that would be available for
Mr. Balmer for 2019
Charitable Donations Tax Credit Carry Forward
Leon Fiero has 2019 Net Income For Tax Purposes and Taxable Income of $70,400.  Each week, without fail, he
plays a nation-wide lottery.  While over the years he has not had any winnings of consequence, his fortunes changed
in 2018, when he won over $320,000.  As he had hoped to do for many years, he donated $120,000 of these
winnings to the Canadian Cancer Society in 2018.   He chose to claim $15,000 of his donations in 2018.  
Determine Mr. Fiero’s maximum charitable donations tax credit for 2019.  Until what year can he claim any unused
portions of his 2018 donation?  

Medical Expense Tax Credit

Mr. Samuel Silverstein has a spouse and a 19 year old dependent son.  Mr. Silverstein’s 2019 Net Income For Tax
Purposes is $125,000.  For 2019, Mr. Silverstein’s spouse has no income  and his son has Net Income For Tax
Purposes of $8,675.  During 2019, Mr. Silverstein and his spouse have medical expenses of $2,042.  His son has
medical expenses of $7,780 which Mr. Silverstein paid.  Determine Mr. Silverstein’s medical expense credit for
2019.