Joan Galley was a salesperson for Goodship Lollipop Ltd., a Canadian public company with outrageous revenues of $forty five million. The corporate produced diverse sweets, equivalent to candy and chocolate bars.
It was a disturbing time for Joan these remaining 18 months. In the summertime of 2022, her main other handed away. Joan has two young folk: Ryan who’s 13 and Julie who modified into 18 on April 30, 2023.
Joan’s 2023 employment contract stated that the Firm would pay Joan an annual monstrous wage of $50,000 plus a commission of 1.5% of her annual money gross sales. Her 2022 gross sales totaled $3,200,000, with $200,000 of this total unexcited by the Firm in 2023. Her 2023 gross sales amounted to $2,800,000, however the Firm had but to fetch $300,000 of these by December 31, 2023.
In 2023, the Firm paid Joan her monstrous wage plus her commission earnings. A overview of her remaining pay stub for 2023 printed the Firm withheld the next from her wage for the one year:
Contributions to the Firm RPP $3,000
CPP Contributions 3,754
EI Premiums 1,002
Premiums for the Firm’s Dental and Health Conception* 1,500
Federal Profits Tax Withheld 15,000
* The concept was funded 50/50 by the workers and the employer and was a Private Health Products and services Conception (PHSP).
The Firm’s team term existence insurance lined Joan. Her coverage was equal to her annual monstrous wage. The Firm paid a top price of $5 for every $1,000 of coverage to the Candy Life Insurance Firm.
In January of 2023, Joan detected a packaging area with a affirm line of sweets ahead of the Firm shipped them. Her eager watch saved the corporate an estimated $360,000 in product recalls. This helped her safe the employee of the one year reward, which was an iPad2 which price the corporate $900.
In September of 2022, the Firm transferred her from Montreal to Toronto. She figuring out the switch would be precious. The Firm paid for all her interesting costs. Sadly, due to short sale of her Montreal house, she incurred a $30,000 loss on its sale. The Firm agreed to reimburse her $20,000 for the loss. The Firm paid Joan the $20,000 on January 14, 2023.
In April of 2022, the Firm granted her the proper to aquire as a lot as five,000 shares of the Firm for $17 per allotment under the employee stock option concept. On the time the Firm granted the option, the shares were trading at $15. On February 1, 2023, when the shares were trading at $20 per allotment, she exercised her option on 3,000 shares. She equipped 2,000 shares at $22 per allotment with a settlement date of December 30, 2023.
To aquire the 3,000 shares, Joan negotiated an curiosity free loan from the Firm for the be pleased stamp. The Firm gave Joan the loan on February 1, 2023. Joan repaid the loan in fleshy on December 31, 2023.
All over 2023 the Firm equipped her with an automobile, which it leases for $450 a month. The auto was also available for her personal expend. All around the one year, Joan drove a total of 35,000 kilometers, 8,000 of which were personal and 27,000 of which were for employment functions. With the exception of for $2,200 of automobile insurance, the Firm didn’t pay for any of her automobile working costs as these were Joan’s responsibility.
Joan was accountable for her salesperson costs (including the automobile working costs). All around the one year she incurred the next:
Total Automobile Charges (Other than Insurance) $5,400
Meals and Leisure with purchasers (no longer billed to purchasers) 2,600
Resorts 1,500
Joan incurred the total meals and entertainment with purchasers while she was away for as a minimum 24 hours.
Joan was a member of the Confectioners’ Association of Canada, a authentic affiliation. Her annual membership dues were $1,400, which she for my portion paid.
Joan met the total cases of ITA 8(1)(f) (deductible salesperson costs).
Joan had a sideline trade called The Cup Cake Diva which she operated as a proprietorship. She started her trade undertaking 10 years within the past and continued it in Toronto. Joan prepared and equipped cupcakes and diverse pastries from her house. Ninety percent of her gross sales were made for social occasions which were held on the total on weekends.
Joan equipped you with the next recordsdata for 2023 with recognize to her trade:
Gross sales Revenues $42,000
Affords (Flour, Sugar, Bins, Etc.) Bought 12,000
Buy of Original Industrial Oven
(For Alternate expend handiest) 2,200
Buy of most modern automobile for money (No longer zero-emission) 39,000
Automobile working costs 3,000
With recognize to the offers, she had a gap inventory of $1,600. On December 31, 2023, the inventory of offers was $900.
Early in January 2023, Joan equipped her ragged automobile for $12,000. It price $35,000. Joan’s trade aged both the ragged and the novel vehicles exclusively. Any personal expend was derived by Joan the utilization of the Firm equipped automobile.
Joan’s daughter Julie helped with the trade. She made the deliveries to put collectively her riding and the daughter showed proper aptitude for going thru purchasers. Joan didn’t offer her any monetary compensation as Julie was happy to be riding a brand novel automobile at the present.
Joan aged 20% of the livable house in her house (including a element for shared areas) for her trade. Her 2023 family costs encompass the next:
Utilities $5,400
Municipal Property Tax 3,800
Maintenance 1,600
Devoted Cell phone Line for the trade 800
Home Insurance 1,900
Mortgage Passion 12,300
The January 1, 2023 UCC balances were as follows:
Class 8 $3,100
Class 10.1 9,000
Joan didn’t claim CCA on her house as she realized that if she did, this might maybe maybe lead to future recapture and capital positive aspects implications.
Her son Ryan was in excessive college and had no earnings of his bear.
Her daughter Julie, no longer figuring out which university program she would take care of to relieve, enrolled section-time (4 months) at a neighborhood college. Joan agreed to pay Julie’s tuition of $1,600 if Julie agreed to transfer any related credit rating to Joan. Julie’s 2023 fetch earnings was $7,200.
All around the one year, Joan paid $5,000 for orthodontic work (braces) for Ryan. The Firm reimbursed her 50% of the amount thru the corporate’s dental and neatly being concept.
In 2023, Joan made $1,600 donations to registered charities.
Think the prescribed curiosity price for loan advantages within the middle of all four quarters of 2023 was 1%.
Required:
A. Resolve Ms. Galley’s minimum:
1. 2023 Receive Profits,
2. 2023 Taxable Profits,
3. 2023 Federal Profits Tax Authorized responsibility or Refund.
In determining these portions, ignore prompt expensing and any GST/HST & PST concerns.
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