On December 27, 2011, Seymour Gravel, at the urging of his wife, Mary Walford, has brought you his preliminary figures for his business. Seymour carries on a business writing and editing instruction manuals on a contract basis. He has six different clients and operates under the business name Crystal Clear Communications from an office in their home.
He knows from past experience that one of his clients will issue him a T4A for the work that he has done for them and has included this information, though he does not yet have the T4A. He is currently missing the information on interest he has paid during the year, except for interest related to his house and his car. He anticipates receiving this shortly.
During the year, Seymour is a full time student at Dalhousie University for three months. He is attending courses in child psychology in order to help deal with Mary's son, William, who has been refusing to go to school and is displaying hostile tendencies.
T2202A - Seymour Box Amount
Tuition fees A $ 2,200
Number of months in school - part-time B 0
Number of months in school - full-time C 3
T4A - Seymour Box Amount Box Amount
Issuer - 3065 Canada Inc.
Contract payment 48 $ 20,000
Income tax deducted 22 0
Area of home used for business (square feet) 160
Total area of home (square feet) 1,500
Gas for heating $ 1,712.86
Insurance - house 757.55
Snow plowing contract 440.00
Installation of new gas furnace 3,675.00
Painting of house interior 2,548.05
Mortgage interest paid to Royal Bank 8456.22
Mortgage life insurance premiums 375.00
Mortgage principal paid 1,279.58
Property taxes 2,533.01
Interest on late property taxes 122.52
The mortgagee of Seymour's house, the Royal Bank, does not require life insurance, but given Seymour's state of health, he feels it is advisable to have life insurance on the mortgage.
Business or Professional Income - Seymour
Revenues without T4A $ 41,603.17
T4A's issued (see T4A information) 20,000.00
Membership dues - Business Writers Association 231.00
Business insurance 126.16
Bank service charges 156.20
Cell phone air time 485.27
Postage and courier charges 110.00
Separate business phone line charge and long distance charges 577.86
Fees for accounting and tax advice 500.00
Air fare (business travel) 526.97
Hotels (business travel) 1,240.91
Meals when traveling on business 607.14
Meals and drinks when entertaining clients 887.12
UCC of furniture - beginning of year 2,254.94
UCC of computer application software - beginning of year 219.15
UCC of computer hardware (Class 50) - beginning of year -
Application software purchased May 12, 2011 525.00
Laptop computer purchased May 12, 2011 2,048.00
Car Costs - Seymour
Description - Subaru, cost = $35,000, bought 2008-02-15
January 1 odometer 89,726
December 31 odometer 124,701
Business kilometers driven 8,412
Parking $ 321.71
Maintenance and repairs 458.63
Car insurance 779.00
Licence and registration fees 49.87
Interest on 4 year car loan granted on purchase date 597.89
UCC of Class 10.1 - beginning of year 15,470.00
A. Open the file that you created for the Chapter 4 version of this Software Problem and save a copy under a different name. This will enable you to check the changes between different versions of this Software Problem.
B. Create a return for Seymour that is coupled to Mary's. (Use the F5 key with Mary's return open to create Seymour's return.) Prepare and print in the following order:
i. the motor vehicle expenses worksheet for Seymour.
ii. the CCA worksheet for Crystal Clear Communications.
iii. the Statement of Business or Professional Activities (T2125) for Crystal Clear Communications.
Ignore any GST/HST implications. Hint: Enter all motor vehicle expenses as non-eligible for GST or HST.
C. Access and print Mary's summary (Summary on the Form Explorer, not the T1Summary).
This form is a two column summary of the couple's tax information. By opening this form from Mary's return, the order of the columns is the same as the one in the previous chapter. For both returns, list the changes on this Summary form from the previous version of this Software Problem. Exclude totals calculated by the program, such as federal tax, the total for non-refundable tax credits and provincial tax from the list, but include the final Balance Owing (Refund) amount.
Sample Of Required Table
Below is a sample of a blank table that would summarize the list of required changes. It would contain the changes to the Summary form from the previous version, excluding calculated amounts other than Balance Owing (Refund).