Assignment: Income Tax Planning
Case
Natalia 45, has been working for the past 11 years with Meridian Credit Union as a branch manager. In 2021, she received a gross salary of $95,000 from Meridian. She has two daughters, Aryana (6) and Emma (10). Natalia has been recently divorced and her ex-husband pays her $680 per month for spousal support and $520 per month for child support.
Furthermore, in 2021, Natalia has incurred the following expenses and received the following additional sources of income:
1) She paid $1,500 per month in child expenses for both children.
2) She sold shares her 500 shares of Rogers Communication for $55 per share, which she had bought a few years ago at a price of $35 a share in her non-registered brokerage account.
3) Also, in her non-registered brokerage account, she sold her NASDAQ ETF for $42,000 that she had bought for $65,000.
4) In her TFSA, she sold shares of Tesla and generated a $18,000 capital gain.
5) In her RRSP, she generated $7,500 in interest income and $2,500 in taxable dividend income.
6) She found time to contribute $6,000 to her TFSA and $5,000 to her RRSP.
She started a sole proprietorship consulting business called "Natalia Consulting". She generated sales in 2021 of $12,500 and expenses of $17,000.
Lastly, her favourite aunt, Mae, died and left her an inheritance of $100,000 from Mae's life insurance policy.
2021 Federal Tax Rates
Federal Tax Rates
Tax Rate Tax Bracket
15.00% Up to $49,020
20.50% 49,021 - 98,040
26.00% 98,041 - 151,978
29.00% 151,979 - 216,511
33.00% 216,512 and over
Task
A. Calculate Natalia's Total Income for 2021.
B. Calculate Natalia's Net Income for 2021
C. Calculate Natalia's Taxable Income for 2021
D. Calculate Natalia's Federal Tax Payable for 2021
E. Based solely on the information provided in the assignment, which non-refundable tax credits will Natalia be entitled to receive and how much Federal tax will she be able to save?