Mr. Allen Arnold is 58 years old. Allen works for a large public company, Big Corporation as an accountant. Allen is in the process of completing her 2017 personal income tax return. Required: Allen needs your help to calculate his Taxable Income for 2017. He has compiled the following information regarding to his transactions in 2017: Salary (gross) $103,000 Deductions Canada Pension Plan (CPP) $2,564 Employment insurance (EI) 836 Income tax 10,800 Registered pension plan 3,500 Private health and dental plan premiums 250 Disability insurance premiums 1,200 Reimbursement for use of company car 600 Big Corporation paid the following amounts on his behalf: CPP and EI $3,881 Private health and dental plan premiums 250 Group term life insurance 350 Disability insurance premiums 250 Registered Pension Plan 3,000 Other information: 1. As part of his employment duties, Allen is required to travel to different company branches throughout Alberta to perform accounting tasks. Big Corporation provides him with a 2017 Toyota Prius and paid for all of the operating expenses. He drove the vehicle a total of 31,000 km in the year with 8,000 being for personal usage. The vehicle was purchased by the employer for $47,000. It was available for his use for the entire year. The operating expenses for the year totaled $8,500. 2. The disability plan was implemented in 2015. Allen paid $200 in annual premiums in 2015 and $500 in 2016. In the current year, as a result of an unfortunate accident he sustained an injury and was unable to work. He was off for 6 weeks and collected $8,000 from the insurance company. 3. On January 1, 2017, Big Corporation implemented a stock purchase plan for all employees giving them the opportunity to purchase up to 5,000 common shares at $10 per share. At that time the shares were valued at $5.00 per share. On February 14, 2017 Allen purchased 5,000 shares when they were valued at $18 per share. He sold 2,000 shares for $30 per share on September 27, 2017. 4. Big Corporation has a policy of paying for certain counseling services for employees. Big Corporation paid $800 for Allen's counseling fees relating to his depression from his divorce. 5. Big Corporation held a contest open to all their employees to come up with a new corporate slogan. Allen’s entry won and he received $500. 6. On April 1, 2017 Big Corporation gave Allen a $150,000 low interest loan to purchase a condo at 1%, the relevant prescribed rate is 2.5%. As he is required under his employment contract to set up a home office, he required more space. He paid legal fees of $1,200 on the purchase of this condo. His expenses for the year are as follows: mortgage interest - $5,800; property tax - $2,400; electricity and water - $1,215; natural gas - $675; toilet repairs - $500. Allen uses 200 square feet of his condo where he principally performs his employment duties. The condo is 2,000 square feet in total 7. Allen got divorced on January 01, 2017. He has two daughters aged 18 and 7 who decided to live with him. The older daughter is a full time university student. She attended Royal Roads University for eight months and paid her own tuition fees of $5,500. Her father gave her an $800 monthly allowance to cover her books and other expenses. In 2017, she earned $6,800 from her summer job. She will transfer any unused tuition credits to Allen. 8. Instead of selling their matrimonial home, he and his former spouse decided to rent the place out and split the net rent (starting from April 01, 2017). They had purchased this house for $200,000 in 2013. An appraisal was done and the fair market value of the house was determined to be $300,000. The appliances in the house were estimated to have a fair market value of $5,000. The house was rented out for $2,400 per month from April to the end of the year. Expenses were property tax - $3,800; utilities - $2,400; maintenance - $800. All the expenses were for the period April to December. Allen and his ex would like to claim the maximum allowable CCA to minimize the tax payable. 9. Allen had the following receipts in 2017: Bonus for 2016 – received January 4, 2017 Commission $5,000 26,140 Eligible dividend from Big corporation – actual amount 2,500 10. Allen paid the following amounts in 2017: Legal fees – appealing 2015 CRA assessment 900 Dues to the Accounting Association 600 Canadian Western Bank – safety deposit box rental 75 RRSP (contribution made February 15, 2018) 4,500 Taxes and interest on unsuccessful appeal above 14,200 Physiotherapy treatments 2,000 Dentist for herself 500 Contact lenses for her 7 year old daughter 250 Orthotics for himself 600 Braces for the 18 year old daughter 1800 11. Allen also had the following transactions in 2017: Proceeds on the sale of a painting (cost $950) $2,100 Proceeds on the sale of a coin collection (cost $2,000) 1,850 Interest income on a two year GIC purchased on April 1, 2015, interest received on maturity (April 1, 2017). 10,000 Receipt from his mother’s employer. This amount was in recognition of his mother’s long service on her death. 12,000 Contribution to a federal political party 1,100 12. Mr. Arnold is the sole proprietor of a dance studio. It has a year end of December 31 and it started business on June 1, 2017. He had the following receipts and disbursements related to the school: Tuition fees billed and received $15,000 Tuition fees to be billed 500 Rent on studio (2,400) Purchase of stereo and karaoke system (3,500) Donation to the Cancer Society (100) 2 day convention to Jasper – meals included (800) Purchase of 12 chairs for the change room (1,200) 13. In 2017, Allen paid $350 a month for child care and $2,500 for hockey lessons for his 7 year old daughter. His former spouse paid him $400 a month in child support pursuant to a written agreement upon their separation on January 01, 2017. In addition Allen’s former spouse also paid $400 per month in spousal support. At year end Allen received $6,000 in total for child support and spousal support. 14. On February 12, 2017 he purchased 2,000 shares of BRX, a Canadian public corporation for $5.50 per share. Allen purchased another 100 shares on March 5, 2017 at $4.85 a share. On April 1st the company paid out a stock dividend of 10%, which resulted in an increase in the paid up capital of $4.00 for each share issued. He sold 1,200 shares on July 15, 2017 at $4.00 a share. On August 10, 2017 he purchased 250 shares at a price of $4.25 a share. At the end of the year he still owns these shares. 15. Allen’s 2016 income tax return indicates the following tax balances: a) $5,000 of interest from the GIC noted in point 11 were reported. b) Allen’s 2016 earned income was $64,000 and her pension adjustment amount was $4,500. She did not have any unused contribution room carry forward. c) A non-capital loss carry forward of $18,000 from 2009 was available. d) A net-capital loss carry forward resulting from 2011 in the amount of $20,000, and $20,000 from 2016. e) Charitable donations of $1,200 from 2016 were not deducted. f) Capital gains reserve was $70,000 in 2016 (capital gains reserve in 2017 is $40,000).
Required: Calculate Allen’s 2017: 1. Net employment income 2. Net property income 3. Net business income 4. Net other income 5. Net Taxable capital gains 6. Total income 7. Other deductions 8. Net income for tax purposes 9. Taxable income.