Tax Return of the Jedi

[Griet van Vliet]

The mutual trust portion of the guy's revenues are as follows: 4,100 units of Débit Agricole mutual trust fund, acquired from the Barkhesh-based bank of the same name when Barkhesh was still GA property at 27 credits/unit. That year, he received a distribution of 2.75/unit, of which 1.20 was a return of capital (4,920, yielding 172.63 units at 28.50/pop) and the rest was property income (6,355). So the adjusted cost base then becomes 110,700 credits (4,100*25.80+4,920) to be compared against the proceeds of 127,341. So a capital gain of 16,641, which is then filed as 8,320.50 because of the 50% deductibility rate. The net and taxable income for that client thus became 546,000 - 115,787 - 8179.60 + 8320.50 = 430,353.90. One more schedule and this client can be dealt with and billed, Griet thought, while inputting that information into that client's income tax payable schedule. Meanwhile, now that all of Pazzo's revenues are accounted for, and thus the hard part was cleared up, the padawan started calculating the net income for tax purposes, and taxable income, of Pazzo:

• Employment income 160,667.03
• Dividends 44,712
• Capital gains 21,122.31
• Net income 226,501.34

 

[Griet van Vliet]

The end of the story would be coming for the second client soon enough: the 19,388.15 amount was charged, on the first 103,915 credits in income, and the remainder would be taxed at a 25.75% rate, so the total income tax payable on the last 326,438.90 was 84,058.02. That place's non-contribution threshold being 14,890, hence 2,233.50 could be deducted, or 15% of that sum. The client's final tax bill is then (84,058.02 + 19,388.15 - 2,233.50) = 101,212.67 and then it was the end of that client's story. Meanwhile, for Pazzo, the end of the story was still rather distant. Although Harli may have transferred 5,000 in tuition tax credit, and SPP/EI are deducted at this stage of the game, the credits are as follows: 11,635 base amount, 5,000 tuition tax credit transfer, 2,564 in SPP, 836 in EI, the hardest parts were medical expenses, which he could deduct (5,475-2,268 = 3,207), and the donations. Before the donations kick in, his balance in non-refundable deductions is 23,242, at 15% rates for tax credits. He donated 5,000 and it's his first tax filing, hence he is eligible for the first-time donor's super-credit. The donation credit is then 15%*200 + 33%*4800 + 1,000 = 2,614. That was possible because 33% can be deducted from the income tax payable to the extent the donator's income exceeds 202,800 credits, and it exceeded by more than 4,800, else the remaining balance would be deducted at 29%.

 

[Griet van Vliet]

The relief shall be forthcoming for this padawan after nearly four harrowing hours of tax-based problems, and the income tax payable on the remaining income at 33% is therefore (226,501.34 - 202,800)*33% = 7,821.44. Plus the base 46,965 on the first 202,800, and then the following deductions are applied on the income tax payable and then the final tax liability, which forms the basis for next year's installment payments of income taxes:

• Basic income tax payable 54,786,44
• Less: Non-refundable tax credits 3,486.30
• Less: Donation deductions 2,614
• Less: Dividend tax credit 6,715,63
• Income tax payable 41,970,51
• Less: Withheld income tax 18,650
• Total balance owing 23,320,51

 

[Griet van Vliet]

"The tax return is completed"

"Good, the trial is over, but the result won't be known until the notice of assessment comes. Now, if there are significant irregularities you will have to attempt the trial again with another administrator, and you can be certain that it won't be the same client at a minimum. But, if the irregularities don't result in large differences, you have passed the Trial of Insight"

A copy of the file is kept in the firm's records; in fact, Griet is authorized to act as the representative for Pazzo for all matters related to taxation. Which means that, in turn, not only she will receive a copy of the notice of assessment, she will also be entitled to file notices of opposition if problems occur that show up on the notice of assessment. Oh, it would be nice if securities were donated to me on Jedi business, and typically for tax purposes the adjusted cost base on such donations is the FMV of the securities at the time of donation. Now, although typically debt securities that are not faction-issued are safer than equity securities, capital gains on equity securities are not taxed in full, unlike interest accrued on debt securities, she thought, while realizing that factions' short lifespans typically make them issue bonds that are short-term in nature if they are investment-grade at all. Anything longer than one year is considered to be speculative if it is faction-issued, and hence factions don't tend to sell bonds with maturities longer than a year. Good if one is investing in the short-term but equity and non-faction debt are the ways to go for the long run.