. Mini-Case B: (4.5 marks) Ava has asked you to help prepare her 2021 personal income tax returns (combined Federal and Quebec). For 2021, she provided you with the following: 14 tax slip from Hydro-Qubec where she works as an engineer, reporting her 2021 gross annual salary of $105,000; T5 tax slip showing interest income received in 2021 of $1,500; On December 1, 2021, she sold 100 shares in Canadian Tire for $180/share (she had purchased 150 shares when they were at $110/share in 2019); Made a Tax-Free Savings Account (TFSA) contribution of $6,000 on January 1, 2021; Contributed the maximum to her Registered Retirement Savings Plan (RRSP) plan on May 15, 2021, when she received her company bonus (note that her 2020 earned income was $100,000; she maximizes her RRSP contribution each year and is not part of a company pension plan); Professional dues from the Order of Quebec Engineers that she can deduct in the amount of $945; and Has a capital loss of $600 from a previous year that she can deduct against her capital gain. . . a) It is February 18, 2022, calculate Ava's 2021 Taxable Income. (1.5 marks) Calculate Ava's 2021 Taxable Income (1.5 marks - 25 marks each) b) Calculate Ava's combined Federal and Quebec taxes payable. Use Table A, 2021 tax rates. Ignore non-refundable tax credits. (1.5 marks) Calculate Ava's combined Federal and Quebec 2021 taxes payable (1.5 marks) c) Calculate Ava's average tax rate. (.5 marks) Calculate Ava's 2021 average tax rate 0.5 marks) d) What is Ava's marginal tax rate? (.5 marks) Ava's 2021 marginal tax rate (.5 marks) e) On December 2021 Ava referred one of her friends to Hydro-Qubec as they were searching for a Junior Engineer to fill one of their open positions. Even though the referral was in 2021, Ava only received the $5,000 Referral Bonus in her first pay in 2022, which she must include in her 2022 personal income tax return. Assuming she had received the Referral Bonus in 2021, how much tax would she have had to pay on this bonus? (.5 marks) Calculate Ava's taxes payable on her bonus using her marginal tax rate 0.5 marks) 24.80% TABLE A Combined Federal & Quebec Tax Brackets and Tax Rates QC 2021 Marginal Tax Rates QC 2022 Marginal Tax Rates Canadian Dividends Other Capital Other Capital Canadian Dividends 2021 Taxable income Income Gains Eligible Non-Eligible 2022 Taxable income Income Gains Eligible Non-Eligible first $45,105 27.53% 13.76% 4.53% 18.37% first $46,295 27.53% 13.76% 4.53% 19.05% over $45,105 up to 549,020 32.53% 16.26% 11,43% 24.12% over $46,295 up to $50,197 32.53% 16.26% 11.43% $ over $49,020 up to $90,200 37.12% 18.56% 17.77% 29.40% over $50,197 up to $92,580 37.12% 18.56% 17.77% 30.08% over $90,200 up to $98,040 41.12% 20.56% 23.29% 34.00% over $92,580 up to $100,392 41.12% 20.56% 23.29% % 34.68% over $98,040 up to $109,755 45.71% 22.86% 29.62% 39.28% ver $100,392 up to $112,655 45.71% 22.86% 29.62% 39.96% over $109,755 up to $151,978 47.46% 23.73% 32.04% 41.30% ver $112,655 up to $155,625 47.46% 23.73% 32,04% % 41.97% over S151,978 up to $216,511 50.23% 25.12% 35.86% $% 44.48% ver $155,625 up to $221,708 50.28% 25.14% 35,93% 45.22% over $216,511 $ 53,31% 26.65% 40.10% 48.02% over $221,708 53.31% 26.65% 40.10% 48.70% Marginal tax rate for dividends is a % of actual dividends received (not grossed-up taxable amount). Marginal tax rate for capital gains is a % of total capital gains (not taxable capital gains). Gross-up rate for eligible dividends is 38%, and for non-eligible dividends is 15%. For more information see Quebec dividend tax credits TABLE B Quebec Basic Personal Amount 2021 Personal Amount 2021 Tax Rate 2022 Personal Amount 2022 Tax Rate $15.728 15% S16, 143 159 Federal Basic Personal Amount 2021 Personal Amount 2021 Tax Rate 2022 Personal Amount 2022 Tax Rate $13,308 1596 $14,398 15% 1) See Federal tax rates for the enhanced federal personal amount which increases the marginal tax rates for taxable incomes in the second highest federal tax bracket Copyright 2002-2022 Boat Harbour Investments Ltd TABLE C Tax-Free Savings Account (TFSA): Annual Limits Years Annual Limit Years Year started 2009 - 2012 2016 - 2018 $5,000/year $5,500/year Annual Limit $5,500/year $6,000/year $6,500/year (estimated) 2013 - 2014 2019-2022 2015 $10,000/year 2023 TABLED Registered Retirement Savings Plan (RRSP): Annual Limits Formula for RRSP contribution limit: 18% of your previous year's earned income less your previous year's pension adjustment to an annual maximum. Year Annual maximum contribution limit 2020 $26,500 2020 $27,230 2021 $27,830 2022 29,210 TABLE E Home Buyer's Plan (HBP) Withdraw up to $35,000 per borrower and up to $70,000 per couple. 15 years to pay back the amount withdrawn . Mini-Case B: (4.5 marks) Ava has asked you to help prepare her 2021 personal income tax returns (combined Federal and Quebec). For 2021, she provided you with the following: 14 tax slip from Hydro-Qubec where she works as an engineer, reporting her 2021 gross annual salary of $105,000; T5 tax slip showing interest income received in 2021 of $1,500; On December 1, 2021, she sold 100 shares in Canadian Tire for $180/share (she had purchased 150 shares when they were at $110/share in 2019); Made a Tax-Free Savings Account (TFSA) contribution of $6,000 on January 1, 2021; Contributed the maximum to her Registered Retirement Savings Plan (RRSP) plan on May 15, 2021, when she received her company bonus (note that her 2020 earned income was $100,000; she maximizes her RRSP contribution each year and is not part of a company pension plan); Professional dues from the Order of Quebec Engineers that she can deduct in the amount of $945; and Has a capital loss of $600 from a previous year that she can deduct against her capital gain. . . a) It is February 18, 2022, calculate Ava's 2021 Taxable Income. (1.5 marks) Calculate Ava's 2021 Taxable Income (1.5 marks - 25 marks each) b) Calculate Ava's combined Federal and Quebec taxes payable. Use Table A, 2021 tax rates. Ignore non-refundable tax credits. (1.5 marks) Calculate Ava's combined Federal and Quebec 2021 taxes payable (1.5 marks) c) Calculate Ava's average tax rate. (.5 marks) Calculate Ava's 2021 average tax rate 0.5 marks) d) What is Ava's marginal tax rate? (.5 marks) Ava's 2021 marginal tax rate (.5 marks) e) On December 2021 Ava referred one of her friends to Hydro-Qubec as they were searching for a Junior Engineer to fill one of their open positions. Even though the referral was in 2021, Ava only received the $5,000 Referral Bonus in her first pay in 2022, which she must include in her 2022 personal income tax return. Assuming she had received the Referral Bonus in 2021, how much tax would she have had to pay on this bonus? (.5 marks) Calculate Ava's taxes payable on her bonus using her marginal tax rate 0.5 marks) 24.80% TABLE A Combined Federal & Quebec Tax Brackets and Tax Rates QC 2021 Marginal Tax Rates QC 2022 Marginal Tax Rates Canadian Dividends Other Capital Other Capital Canadian Dividends 2021 Taxable income Income Gains Eligible Non-Eligible 2022 Taxable income Income Gains Eligible Non-Eligible first $45,105 27.53% 13.76% 4.53% 18.37% first $46,295 27.53% 13.76% 4.53% 19.05% over $45,105 up to 549,020 32.53% 16.26% 11,43% 24.12% over $46,295 up to $50,197 32.53% 16.26% 11.43% $ over $49,020 up to $90,200 37.12% 18.56% 17.77% 29.40% over $50,197 up to $92,580 37.12% 18.56% 17.77% 30.08% over $90,200 up to $98,040 41.12% 20.56% 23.29% 34.00% over $92,580 up to $100,392 41.12% 20.56% 23.29% % 34.68% over $98,040 up to $109,755 45.71% 22.86% 29.62% 39.28% ver $100,392 up to $112,655 45.71% 22.86% 29.62% 39.96% over $109,755 up to $151,978 47.46% 23.73% 32.04% 41.30% ver $112,655 up to $155,625 47.46% 23.73% 32,04% % 41.97% over S151,978 up to $216,511 50.23% 25.12% 35.86% $% 44.48% ver $155,625 up to $221,708 50.28% 25.14% 35,93% 45.22% over $216,511 $ 53,31% 26.65% 40.10% 48.02% over $221,708 53.31% 26.65% 40.10% 48.70% Marginal tax rate for dividends is a % of actual dividends received (not grossed-up taxable amount). Marginal tax rate for capital gains is a % of total capital gains (not taxable capital gains). Gross-up rate for eligible dividends is 38%, and for non-eligible dividends is 15%. For more information see Quebec dividend tax credits TABLE B Quebec Basic Personal Amount 2021 Personal Amount 2021 Tax Rate 2022 Personal Amount 2022 Tax Rate $15.728 15% S16, 143 159 Federal Basic Personal Amount 2021 Personal Amount 2021 Tax Rate 2022 Personal Amount 2022 Tax Rate $13,308 1596 $14,398 15% 1) See Federal tax rates for the enhanced federal personal amount which increases the marginal tax rates for taxable incomes in the second highest federal tax bracket Copyright 2002-2022 Boat Harbour Investments Ltd TABLE C Tax-Free Savings Account (TFSA): Annual Limits Years Annual Limit Years Year started 2009 - 2012 2016 - 2018 $5,000/year $5,500/year Annual Limit $5,500/year $6,000/year $6,500/year (estimated) 2013 - 2014 2019-2022 2015 $10,000/year 2023 TABLED Registered Retirement Savings Plan (RRSP): Annual Limits Formula for RRSP contribution limit: 18% of your previous year's earned income less your previous year's pension adjustment to an annual maximum. Year Annual maximum contribution limit 2020 $26,500 2020 $27,230 2021 $27,830 2022 29,210 TABLE E Home Buyer's Plan (HBP) Withdraw up to $35,000 per borrower and up to $70,000 per couple. 15 years to pay back the amount withdrawn