Thato Smit Has Provided You with the Following Information for 2020

question 10

Essay

Thato Smit has provided you with the following information for 2020:
That owns rental properties originally valued at $275,000.(Property 1: land $70,000, building $55,000) (Property 2: land $90,000, building $60,000)
The buildings are Class 1 (4%) properties.Net rental income before CCA in 2020 was $11,000.
$\bullet$ The UCC on building 1 at the beginning of 2020 was $50,000.
$\bullet$ The UCC on building 2 at the beginning of 2020 was $40,000.
$\bullet$ Property 2 was sold in 2020 for $250,000 (land $200,000, building $50,000)
Thato owns shares in ABC Inc.(a CCPC) valued at $50,000, and received $5,000 in non-eligible dividends on the shares in 2020.
Thato purchased a 5-year GIC two years ago for $30,000, and the interest earned in 2020 was $1,000.
Thato worked full-time as a baker in 2020, earning a gross salary of $45,000.
Thato is in a 45% tax bracket.
Required:
Calculate Thato's net income for tax purposes in 2020 in accordance with Section 3 of the Income Tax Act (exclusive of the enhanced CPP).Thato will take the maximum CCA allowed this year on the rental properties.

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Definitions:

Residuary Clause

A provision in a will that assigns the remainder of the deceased's estate after specific gifts have been disbursed.

Uniform Anatomical Gifts Act (UAGA)

Legislation that facilitates the donation of organs and tissues for transplantation purposes.

Bequeath

The act of leaving personal property to someone through a will.

Personal Representative

A personal representative is an individual appointed to administer the estate of a deceased person under a will or through a court process.