Sachin has always lived in Quebec and is ready to file his 2023 personal income tax returns. He feels that he is heavily taxed and has stated that he pays 50% of his earnings in taxes. You believe that this is an exaggeration and will help with his tax calculations below based on the information he has provided.
Information that Sachin has provided:
-Gross salary in 2022 $100,000
-Gross salary in 2023 $112,900
-Gross salary in 2024 $121,200
-Bonus in 2023 $17,000
-Sachin does not participate in a company pension plan
-Sachin always makes the maximum RRSP contribution each year on March 1st
-Sachin always makes the maximum TFSA contribution each year on March 1st
-Sachin has annual professional dues of $900 that he pays to the Barreau du Québec (professional order of lawyers)
-Canadian eligible dividends of $1,000 (gross-up rate is 38%)
-Sold 200 Shopify Inc. shares for $102/share in November 2023 (bought 400 shares in Shopify when they were at $54/share)
-Had a capital loss of $2,000 from a previous year that he hoped to apply against his capital gain
a) In calculating Sachin’s 2023 personal income tax returns, what is his Total Income?
Show calculations for 2023 Total Income: (2 marks)
b) In calculating Sachin’s 2023 personal income tax returns, what is his Taxable Income?
Show calculations for 2023 Total Income: (2 marks)
a) Total Income for 2023:
Gross salary: $112,900
Bonus: $17,000
Canadian eligible dividends: $1,000
Capital gain from selling Shopify shares: $102 * 200 - $54 * 200 = $9,600
Total Income = $112,900 + $17,000 + $1,000 + $9,600 = $140,500
b) Taxable Income for 2023:
Total Income: $140,500
Less: RRSP contribution (maximum for the year)
Less: TFSA contribution (maximum for the year)
Less: Professional dues: $900
Less: Capital loss from previous year: $2,000
Taxable Income = $140,500 - (RRSP contribution + TFSA contribution + $900 + $2,000)
Sachin can determine his RRSP and TFSA contributions for 2023 based on the maximum limit set by the CRA.