Integrated Problem Week 1

Task 5

Net Income is:

 Employment Income
 Business Income
 Property Income
 Other Income

Add: ½ capital gains net of losses

 Property income would include the rental amount less expenses. Expenses would include
Interest, property taxes and CCA (not stated in example).
 Therefore net property income can be shown as:
o 2019: Income 4500 – Interest and Taxes 6200 = -1700
o 2020: Income 2400 – Interest and Taxes 3600= -1200
 UCC at beginning of 2019 for building is assumed to be purchase price of 326,000.
 UCC 2019 would be 326,000 x 4% = 13,040. Max CCA claim is not used due to negative income.
 UCC 2020 would be (326,000 – 13,040) x 4%= 12,518. Max CCA claim is not used to negative
income.
 Gain on sale would be calculated as: 396,500 – 326,000 = 60,500. Only half of the gain is
included in taxable income at 30,250. The net loss carried forward of 2000 can be deducted from
this amount bringing it to 28,250.
 In the case of the unlimited life franchise the depreciation would be added back and the CCA
used for calculation of net income for tax purposes. Would classify as 14.1 class with 5% rate.
Therefore CCA would be 67,500 x 5% = 3,375.
 In the case of the manufacturing equipment this should have CCA examined and depreciation
added back as well. Currently qualifies for 50% CCA and first year exemption since acquired after
2015. CCA should be 12,000 x 50% = 6,000.
 Any unused CCA amounts can be carried forward in following years.

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