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Determine the income and taxable income

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Reference no: EM131652299

Question - Ms. Isabelle Cardin had a tumultuous year in 2014. She broke her engagement early in the year and quit her job. She moved to a resort area to take a waitress job and to start up a fitness instruction business. She has had the following items correctly calculated and classified as either inclusions, deductions or tax credits for the purposes of determining her taxable income and federal tax.

Inclusions:

Benefit received from Employment Insurance Program - $600

Board and Lodging Provided by employer during busy season of resort - $8,000

Bonus from resort employer - $500

Business revenue from fitness instruction fees - $2,000

Gratuities as a waitress - $12,100

Interest on Canada Savings Bonds - $775

Rental Revenue - $6,000

Salary Received as a waitress - $12,000

Taxable Capital Gain - $3,750

Retiring Allowance from Previous Employer - $800

Deductions, Losses, and Tax Credits

Allowable capital loss - $4,500

Capital cost allowance on fitness business equipment - $1,300

Capital cost allowance on rental building - $1,200

Charitable gifts tax credit - $26

Child Care Expenses - $1,800

Canada Pension Plan Contributions tax credits on employment earnings - $215

Medical Expenses tax credit - $9

Business expenses of earning fitness instruction fees - $900

Expenses of objection to a tax assessment - $65

Interest on funds borrowed to pay expenses of earning fitness instruction fees - $75

Maintenance on rental property - $1,100

Mortgage interest on rental property - $2,500

Moving Expenses - $1,700

Non-Capital Losses from previous year - $600

Personal Tax credit - $1,671

Property tax on rental property - $1,000

Employment Insurance Premiums tax credit - $92

Union Dues - $100

Canada Employment Credit - $169

You have been asked to:

(A) Determine the income, taxable income and basic federal tax based on the above correct information using the ordering rules in sections 3, 111.1, and 118.92. Assume federal tax before credits is $4,565 in 2014.

(B) Cross-reference each amount to the appropriate section of the Act.

Reference no: EM131652299

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