Calculate the minimum income under Division B

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Reference no: EM132800591

Question - Lucy comes to you for advice in February 2021. Last year, 2020 was a year of considerable change and turmoil for her. Her job in Waterloo, with Takeover Ltd., evaporated on March 31, 2020, as a result of a reorganization of the company's business after a merger with a competitor. She found another job in Dundas (an improvement), but it required her to sell her house to move there. Her divorce from her former husband became final during 2018. Lucy, is a single parent of a nine-year-old daughter.

Other information on receipts and benefits:

Salary earned in 2020 ($40,000 in Waterloo, $54,000 in Dundas) $94,000

Profit from sale of cosmetics at home parties held in spare time 4,850

Interest on Canada Savings Bonds 1,725

Spousal support pursuant to divorce agreement ($600 per month for her support and $450 per month for the support of her daughter, age 9) 12,600

Moving allowance 4,500

Disbursements and withholdings:

Employment Insurance premium withheld 856

Canada Pension Plan contributions withheld 2,898

Union dues 500

Net rental loss (for tax purposes) on investment property (4,800)

Registered retirement savings plan contributions, made on December 17, 2020 (2019 earned income was $134,000) 26,S00

Registered education savings plan payments 2020 ($60 per month) 720

Tuition fees for 4 months part-time at a local University 1,910

Proceeds on the sale of her house on March 15, 2020 - 200,000

The house cost $90,000 in 2007. She has previously sold her cottage in 2015, giving the cottage the maximum designation as a principal residence in order to have a nil taxable capital gain.

Payment to babysitter for childcare of (38 weeks @ $100 per week) and during school holidays (8 weeks @ $500 per week) 7,800

Summer camp for daughter (4 weeks @ $300 per week) $1,200

At Christmas time her Dundas employer gave her a $500 cash gift 500

Required -

(A) Calculate the minimum income under Division B for Ms. Haddie in 2020?

(B) Calculate the taxable income for 2020 and federal taxes payable for 2020?

Reference no: EM132800591

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