Linda James (40 years old) is an employee of a Canadian controlled private corporation (CCPC). She is married to Steven (45 years old), who is a stay-at-home Dad. They have a 5 year old daughter who is severely disabled, and has been certified by her Doctor for the disability tax credit. Linda’s mother also lives with them. She is 75, healthy, and has net income of $16,000.
Notes:
1. Linda received gross salary of $85,000. From this amount, CCPC deducted income taxes of $22,000, CPP contributions of $3,754.45, EI premiums of $1,002.45, registered pension plan contributions of $6,000, and union dues of $550.
2. In addition to her salary, the CCPC paid the following on Linda’s behalf:
Registered pension plan - $6,500
Group private medical and dental insurance - $625
Group disability insurance premium - $300
3. Linda had the use of a car which the CCPC purchased for $35,000 and that currently has a net book value of $21,000. She drove a total of 25,000 km, of which 19,000 km were for employment purposes. The company paid all of the operating expenses of $4,500.
4. Linda participates in the CCPC’s stock option plan. In May of 2006, she received options to purchase up to 2,500 shares at $10 per share. CCPC’s shares were valued at $9 at this date. She exercised the options on June 17, 2019. At this time, the shares were valued at $15 per share. On September 27, 2024 she sold 1,000 of these shares for $20 per share and paid brokers fees of $500.
5. Linda recently received a small inheritance from her great Aunt. She has decided to catch up on her retirement savings and on December 1, 2024, purchased $13,000 in RRSPs for herself and $4,000 in RRSPs for her husband. Her 2023 Notice of Assessment indicates that her earned income was $75,000, her pension adjustment is $8,000 and that she has $15,000 in unused contribution room.
6. Other receipts and (disbursements) during the year:
Prescription medicine for mother ($2,500)
Sale of ring [cost $800] $1,300
Donation to registered charity ($4,000)
7. A review of Linda’s 2023 T1 revealed the following information:
Net-capital losses carryforward from 2015 of $27,000.
END OF DESCRIPTION
Question 13 (22 points)
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For the 2023 taxation year, calculate the following for Linda:
(A) NET INCOME, which includes her net employment income, net taxable capital gains, and other deductions. (19 marks)