question archive Financial information relating to the 2020 taxation year of George is outlined below: Directors fees received for being on the board of directors of a Canadian public corporation $40,000 Gain on sale of land that was acquired in 1996, on which Sam intended to construct a vacation home

Financial information relating to the 2020 taxation year of George is outlined below: Directors fees received for being on the board of directors of a Canadian public corporation $40,000 Gain on sale of land that was acquired in 1996, on which Sam intended to construct a vacation home

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Financial information relating to the 2020 taxation year of George is outlined below:

  1. Directors fees received for being on the board of directors of a Canadian public corporation $40,000
  1. Gain on sale of land that was acquired in 1996, on which Sam intended to construct a vacation home. The land had an original cost of $170,000 and was sold for $182,000.
  1. Gain on sale of condominium units. In 1997, Sam purchased a small apartment building. He immediately renovated and improved the property and sold the individual apartments as condominium units for $75,000 gain.
  1. Receipt from the partial withdrawal of funds from his RRSP $10,000.
  1. Dividends received from a Canadian public corporation $900.
  1. Loss on sale of shares of a Canadian public corporation $9,000.
  1. Rental loss from another apartment building which Sam still owns, $40,000.
  1. Payment of spousal support to his former spouse $4,800.

Required

In accordance with the format and categories specified in section 3 of the Income Tax Act,

determine Sam’s net income for tax purposes for the 2020 taxation year. Explain any loss carry-forwards you may have.

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Answer:

Income from Salary

Director's fess: 40000

Income from House Property

Rental Loss: (40000)

Income from Capital Gains/ Losses

Gain on sale of land

Sale Consideration: year 2020: 182000

Indexed cost of Acquisition: year 1996: 289*170000/100= 170000

Gain on sale of land: 12000

Gain on sale of condominium: 75000

Loss on sale of shares: 9000

Income from Other Sources

Withdrawal of RRSP: 10000

Dividend :900

Total Gross Income 97900

* Loss on rental income set off from salary income

* loss of Sale of share to be carry forward

Less: Non Taxable Incomes:

Withdrawals from RRSP 10000

Dividend 900

Total 19000

Net Income 78900

Carry forward loss on sale of share-9000