Taxation Principles in Canada: Analyzing a Tax Situation of

School: York University - Course: TAXATION 3520 - Subject: Accounting

Assignment #1Group Assignment Professor: Aron Mak, MAcc, CPA, CA, CMA Date: December 03, 2022 CSAC 3561: Taxation Principles in Canada Course StudentStudent Number Hung Tran219100171 Livleen Kaur GillGuranjan Kaur219430123 218615401 Bhumika Prajapati219294842

CASE 1 It is February of 2023, you, CPA, were about to meet with your new clients, Nicole and Joe.They have come to discuss their tax situation with you. They predict that Nicole will not have to pay taxes for the 2022 year, which they believe will allow Joe to claim the non-refundable tax credit of 'spouse credit'. They have provided you with the following information, including the statements from their companies (see Exhibits I and II) which they have prepared themselves. Joe would also like to know the tax liability for his corporation, 123456 Ontario Ltd. Facts Nicole and Joe have been married for ten years. They are both 39 years old, and they have three children under the age of five. Their children attended daycare four mornings a week during 2022 while they worked. The total cost of the daycare for all three children was $2,400. Nicole and Joe receive the monthly Canada child benefit for each child. Joe  Joe is the sole shareholder and manager of 123456 Ontario Ltd., a local furniture manufacturing plant. He earns a pre-tax salary of $75,000 per year from 123456 Ontario Ltd.  Joe received the following benefits from 123456 Ontario Ltd. in 2022: o Private health and dental care: $500 o Life insurance: $600 o $2,500 worth of products at cost o Registered pension plan (RPP) contributions: $3,300  (123456 Ontario Ltd. also deducted $3,300 from Joe's salary, which was Joe's contribution to his RPP)  Joe contributed $1,800 to his RRSP for the 2022 taxation year (which is within his allowable limit).  In 2021, Joe borrowed $10,000 from the bank to purchase a set of collectible coins for $12,000.In 2022, Joe was able to sell the coins for $20,000, and he incurred interest expense of $800 and $600 for year 2021 and 2022, respectively. Nicole  Nicole began part-time employment at Fitness Inc. in 2022, and earned a gross salary of $25,000. She did not have any employment income the previous year.  Nicole received free use of the owner's cottage for two weeks in May, which is typically rented out for $700 per week.  She began a small home-based proprietorship - "Nicole's Consulting" in 2021 - which generated $300 a month in pre-tax profits in 2022. The business operates from a 200