Case Study
Read the information below and then answer the questions which follow.
Sonja (born December 2, 1969) is married to Jeremy Anderson (born April 5, 1964). They are the parents of three children: Derrick (born July 9, 1997); Wayne (born January 15, 2002) and Chelsea (born May 28, 2006). Chelsea is unable to walk and uses a wheelchair. She has a T2201 on file with CRA and Jeremy has claimed the disability transfer for Chelsea in previous years.
In 2011, Sonja had suffered an injury that caused her to go blind. She also has a T2201 on file with CRA. For the first part of the year, she received $8,500 in income from a group sickness or accident insurance plan which was an employee-pay•all plan that only she contributed to. She never received a slip for this benefit. She also received Worker's Compensation Benefits (WCB) of $7,800 on a T5007.
In April, Sonja received a $23,000 inheritance from her great-aunt. She set $15,000 aside with other savings to use as a down payment on a new home later in the year, and put $1,000 each into savings accounts for her three children. All three children received $25
each in interest from the savings accounts which Sonja set up for them with part of her inheritance money. The bank did not issue information slips for the interest paid. Sonja contributed the remaining $5,000 of inheritance to a spouse or common-law partner RRSP.
1. For each of the following amounts and for each family member (if applicable):
Itemize all amounts of this type (indicate who received it and how much)
Determine how much income, if any, is required to be reported on a tax return
For each taxpayer, state the line(s) on the T1 or forms/Schedules on which this should be reported and the total amount to be reported
If any item is not reportable for tax purposes, write "Nil" and explain the reason why.
a. Group sickness or accident insurance plan benefit
b. WCB benefit
c. Inheritance
d. Wages
e. Strike pay
f. Retirement allowance
g. Scholarship
h. Capital gain from sale of the house
i. Universal Child Care Benefit
j. Odd jobs
2. Who should report the bank interest of $25 that each of the children received? Explain why.
a. Chelsea:
b. Wayne:
c. Derrick:
3. Who should report the $2,000 Jeremy had taken out of the RRSP that Sonja had purchased?
Explain why.
4. Jeremy, Sonja and Derrick are all filing returns this year. For each of the following type of claim:
• Itemize everything of this type
• State the total dollar amount, if any, which may be claimed and explain.
• Indicate on whose return it must be claimed: Jeremy, Sonja, or Derrick (if both Sonja and Jeremy are eligible to claim an item, write "either").
If any item cannot be claimed for tax purposes, explain why.
a. Child care
b. Moving expenses
c. Spousal RRSP contribution
d. Retiring allowance transfer to RRSP
e. Charitable donation
f. Disability supports
g. Home accessibility expenses
h. Medical expenses
i. Home buyers' amount
j. Monthly transit passes
k. Fitness tax credit
l. Arts amount
m. Union dues
5. For each of the following boxes on Jeremy's T4, please answer:
What does this box represent?
On which line will it go on the Ti? If it is not to be entered on the Ti, please state the reason why.
6. Calculate Derrick's total federal tuition, education and textbook amount. How much will he use on his return? What can he do with his unused amount, if any? Explain your answer.
7. Assume Jeremy will claim the children on his tax return. What is the maximum amount Jeremy can claim for each of the following?
a. Family caregiver amount for children under 18 years of age
b. Disability amount transferred from a dependant (not a spousal transfer)