Taxation

  

Question 3

· RogerArmstrong (D.O.B. 1967-01-01) is an insurance broker who has been very successful at his job in the last few years. 

· Three years ago, his only child, Victoria, was driving a car that was hit by a distracted driver. She and her husband were killed, and their 13-year-old son, Geoffrey, was blinded by the accident. 

· Roger and his wife, Isabella, adopted Geoffrey. Isabella quit her part-time job to care for him. 

· Isabella’s parents went through a nasty separation a few years ago and Rita moved in with Roger and Isabella. Isabella’s father’s (Michael) current location is unknown, but it is believed that he is living somewhere in the Baltic. 

· Isabelle cares for her mother, Rita, who lives with them. Rita suffers from dementia. The family doctor has signed a letter stating that she is dependent on Roger and Rita because of her impairment. Rita does not meet the residency requirements necessary to qualify for Canadian Old Age Security.

· In addition to his salary, Roger also earns commissions. His employer requires him to have an office in his home and has signed the form T2200 each year to this effect.

· In January 2018, Michael was arrested in Estonia. Isabella had to spend three weeks in Estonia before she could get him released from jail. 

· During this time, Roger paid Nannies on Call $5,000 for in-home help to take care of Geoffrey while Isabella was away.

· During the year, Roger’s employer reimbursed $4,000 for meals and entertainment with clients, $3,500 for hotels and $6,000 for airline tickets.

· Roger paid $800 for the care and feeding of Geoffrey’s seeing eye dog.

· During the year, Isabella and Roger made donations of $5,000 and $1,000, respectively, to the Seeing Eye Dog Society.

· During the 2018 taxation year, Roger paid for the following medical expenses for the following individuals:

  

Name

Procedure

Amount

 

Roger

Dental

$500

 

Roger

New Glasses

$1,200

 

Roger

Prescriptions

$250

 

Isabella

Dental

$400

 

Rita

Prescriptions

$800

 

Geoffrey

Dental

$700

· Finally, Roger has a home office which is used exclusively for to earn income and approximately 1/5th of the house’s square footage is dedicated to the home office. During the 2018 taxation year, Roger incurred the following expenses:

  

Expense

Amount

 

Hydro

$3,000     

Insurance

$1,200

 

Maintenance

$4,500

 

Mortgage   Interest

$7,000

 

Mortgage   Life Insurance

$600

 

Property   Taxes

$6,500

Required: Prepare the Roger’s 2018 income tax return using the Profile tax software program.

  

Name

Isabella   Armstrong

Geoffrey   Armstrong

Rita   Johnson

Michael   Johnson

 

Date   of Birth

1966-01-01

2003-02-01

1950-03-01

1950-02-01

 

Income

$9,500

$0

$600

$500

Roger’s T4 slip from his employer (Insurance Inc.) has the following amounts:

  

Box 14   $400,000

Box 22   $120,000

 

Box 16   $2,593.80

Box 42   $95,000

 

Box 18   $858.22

Box 46   $1,000