Securitized Donations

[Griet van Vliet]

The testamentary executors transferred, tax-free, the following stuff at the following value: farmland worth 375,000 (and hence serves as ACB for him for any future transaction), and, since the farm buildings and equipment were transferred at their UCC values of 253,000 and 95,000 respectively, with their capital costs being 325,000 and 130,000. So he made no capital gains on the land but only combined CCA recaptures of 37,000 when the farmland, farm buildings and farm equipment were sold for its fair market values of 375,000, 275,000 and 110,000. Now the time has come to tally the net (and taxable) income because the decision to allocate the childcare and medical expenses depend on it: since the medical expenses are deductible to the extent they exceed 3% of the net income, better to deduct them on the lower-income member of a married couple if at all possible. The total Net Income (at this point) for the husband was then 122,885.71 and then the time has come to calculate the total tax liability of the wife: (136,776.80-91,831)*26% + 16,300 + 5,187.60 - (11,635+2,000)*15% + 1,716.44 = 32,844.70.

 

[Griet van Vliet]

Now that it was determined that the husband was, in fact, the lower-earning of the two, it was time to check actual childcare expenses (12,000 + 4*2*125 = 13,000) against the lower of the following limits: the sum of the yearly child care limits (2x 5,000 since they are both 8-year-olds), or 2/3 of his earned income, or 2/3*(105,500 + 850). Clearly the latter amount is way higher than the actual childcare expenses, but the yearly childcare limits were lower, so that was the deduction: 10,000. Then his net and taxable income becomes 112,885,71; time to ponder the medical expenses. He has 12,900 in eligible medical expenses, since 8,600 was disallowed for non-reconstructive plastic surgery. For this reason he could then claim 10,632 in medical expenses, and then his non-refundable tax credits mount to (11,635 + 10,632 + 836 + 1,178 + 2,564 = 26,845) and hence cut 4,026.75 off his income tax liability before he could even consider the donations. Now, as for the donations, he gave 8,400 credits to Hearts on Noses and he is also eligible to the first-time super-donor credit of 1,000. Deducting 30 + 8,200*29% + 1,000 = 3,408, the total income tax payable would thus become (112,885.71-91,831)*26% + 16,300 - 3,408 - 4,026.75 = 14,339.47, and then came the withheld 18,500, for a refund of 4,160.53 and, in his instructions to Griet, any refund from one would be applied to the others' balances owing, if applicable. So the husband's refund is nil, the oldest son's owing balance is also nil, and the wife's new owing balance is then 32,844.70 - (4,160.53 - 84.75) = 28,768.92.