Juan Hoop is a 58 year old executive working as the V.P. of Marketing for the X Company. He is married to Lesley and tog

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Juan Hoop is a 58 year old executive working as the V.P. of
Marketing for the X Company. He is married to Lesley and together
they have 4 children, Jhonny aged 15, Benjie aged 12, Shirley aged
5 and Annette aged 3.
Both Juan and his spouse work full time. They hired a
nanny to take care of the children when they were at work. They
paid the nanny $300/week for 44 weeks to look after the
children. In July 2021 they paid $3,000 for Jhonny and Benjie
to go to summer camp for 4 weeks. Lesley’s earned income in
2021 was $185,000.
You have for several years been preparing his income tax
return for him. He has now contacted you for the preparation of his
T1 Return for the year 2021.
Juan has provided you with the following information:-
Gross Salary……………………………………………………………………………………$125,000
Income
taxes withheld………………………………………………………… 40,000
Canada
Pension Plan contributions……………………………………….…3,166
Employment
insurance
contributions ……………………………………… 800
Additional Information:-
i. Taxable
capital gains(allowable capital loss)
Nestle
Foods Ltd. (public company)……………………………………………18,000
Shares
of Fortis(public company)………………………………………………….1000
ii. Monthly
pension of $1,500 from a previous employer…………………………….18,000
Dividends
from Bell Canada(public company) cash amount……………………..
1,000
Sale
of 100 shares of AT&T. He incurred an allowable capital
loss of……….. 4,500
Interest
from a joint account with his spouse at the
TD Bank,,,,,,,,,,,,,,,,,,,,,, 1,400
Interest
from
a GIC ………………………………………………………………………….. 600
Interest
on loan
to sister…………………………………………………………………………. 260
Dividends
from U.S. Corporation(15%
withholding tax)…………………………. 5,100
Dividends
from
McCain foods(CCPC)………………………………………………………. 1,500
Carrying
charges on loan to purchase
McCain shars……………………………….. 1,000
Iii Juan
likes to paint scenes of Ontario in his spare time. In 2021,
he exhibited two of his painting in the local art gallery .
These were sold for $1,800.
iv. During
2021, Juan sold his three residences, in order to purchase a larger
home in a more expensive suburb. The following facts relate
to these two residences:-
Date Purchased………….Cost………....Compensation……………….Proceeds
City Home……………………..2012………………………..$190,000…………$42,000………………………$700,000
Cottage………………………..2017………………………… 31,000……………24,000………………………..400,000
Farm…………………………..2019…………………………...15,000……………21,000…………………………150,000
iv. Juan
also is the owner of two rental properties in Waterloo,
Ontario. Details of the two rental properties in 2021 are as
follows.:-
Property
A……………………….Property B
Rental Revenue……………………………………..$36,000……………………………..$24,000
EXPENSES:-
Utilities………………………………………..7,000…………………………………..5,000
Property taxes……………………………..5,000……………………………………1,700
Repair
& Maintenance………………… 8,000…………………………………..7,000
The Undepreciated capital cost at January 1,2021 on Property A
was $415,000 and Property B was $330,000. On December
15th.,2021, Juan sold Property B for $600,000. The
original cost of the property B was $345,000. He paid real estate
commission of $15,000.
v. In
May 2021, he used the proceeds from the sale of Property B above to
purchase a duplex which he rented . This property was
purchased for $900,000. Interest on the $500,000 mortgage was
$6,100 for the year 2021. For the 7 months in 2021 he rented
the property. Details of the rental is as follows:
Gross
Rental Income…………………………..$18,000
EXPENSES:-
Advertising
for clients………………(500)
Property
taxes…………………………(3,400)
Utilities……………………………………(2,000)
vi. In
2021, Juan contributed $3,000 to his spouse’s RRSP and $5,000 to
his own RRSP. His earned income in 2002 was
$215,000. The employer reported a pension adjustment of
$7,000 for the year. He had unused deduction room from
previous years of $10,000.