Question

As well as employment income,Shirley Hujest has the following sources of income in 2018:

Dividends received .

-Taxable Canadian public corporation ABC Ltd $8,000 .

-Taxable Canadian controlled private corporation XYZ Ltd $ 2000 .

-Foreign corporation in Canadian dollars QRS ltd (Net amount after deduction of foreign tax of $750) $4,250

Interest received

- $3,500 interest received during the year on a GIC which matured during 2018.A portion of this interest 3,150 has been accrued and reported in previous years. .

- Accrued interest on a $100,000, 6% compound interest GIC bought on April 1, and maturing on April 1, 2019.All of the interest will be paid at maturity ,and interest accrues annually on April 1.

- $1,350 interest received on a six-month term deposit from June 12, 2018 to December 12, 2018.

Class UCC Net income before CCA

- Property 1 1(4%) $95,000 $1,000

- Property 2 3(5%) $70,000 $(4,000)

- Property 3 1(4%) $100,000 $5,000

Other Investments

Shirley had an $80,000 Government of Canada 7% coupon bond which she gave to her 14 year old daughter in 2016,in an attempt to shift income to her child. Interest on this bond is paid every year on July 1. The 7% interest payment for 2017 was used to purchase a 4% GIC in her child,s name. The same thing was done with the 2018 interest payment.

Required: Calculate Shirley,s total income from property for 2018

Answer 1

Step 1

Property Law in Canada

Property, in legal sense, can mean real property in the form of land and buildings, or personal, movable property. Property law under the common law in most of Canada deals with a wide range of rights and obligations owing to individual and governments and has evolved enormously, particularly in fairness to women.

Step 2

In view of above total income from property of Shirley will include all income received from Corporations as Dividend, interest received and accrued.

Step 3

Total income from property will be as under:

Dividend received from:

Taxable Canadian public Corporation ABC Ltd    $ 8,000

Taxable Canadian controlled Private Corporation XYZ Limited $ 2,000

Foreign Corporation in Canadian dollar QRS Limited    $ 5,000

( Tax deducted has been included in the total dividend)

Total dividend received    $ 15,000

Interest income

Interest received on GIC $ 350

Accrued interest on GIC purchased on April 1 $ 75,000

Interest on short term deposit    $ 1,350

Total Interest received/accrued    $ 76,700

CCA on property

Property 1 $ 1,000

Property 2 $ (4,000)

Property 3 $ 5,000

Total $    2,000

Income from other investments

Interest received from coupon bonds has not been taken into account since these have been purchased in name of daughter though 14 years old and interest received have been utilized in purchase of additional GIC in name of her child.

Thus total income worked out to be

$ 15,000 + $ 76,700 - $ 2,000 =$ 89,700