BUSI 355 Comprehensive Case Assessment

2024 Winter Term 2

Purpose of the Assignment

The purpose of the assignment is to incorporate the following elements:

1.  Application of course concepts, Canadian Income Tax legislation, and court rulings to real-world taxation issues and scenarios.

2.  Further development of analytical, problem-solving, and written business communication skills.

3.  Increased working knowledge of Excel worksheet preparation.

General Requirements and Assumptions

You are required to determine Sacha Santorino’s Net Income for Tax Purposes by providing a breakdown of the various categories of income according to the Ordering Rules in Section 3 of the Income Tax Act. In addition, taxable income and taxes payable must also be determined using the information provided. The results must be communicated in a one-page memo to your client.

Word document - instructions

Attractive Cover Page (File Cover) for your report (to be presented to your client).

Use report format for content.

A one-page memo to your client outlining the net results of your review. You will need to

provide specific details that you feel will help your client gain a better understanding of how taxes payable were determined and identify potential tax planning items that may be of interest. You will need to identify the total taxes owing and a description of how you were able to determine them. Remember, your client may not have a good understanding of the Income Tax legislation, so keep this in mind when preparing your memo. A sample memo format has  been provided in Canvas.

Excel workbook - instructions

The Excel worksheets are required for organizing your client’s net income for tax purposes, taxable income, and taxes payable calculations according to the relevant provisions.

All your planning assumptions are to be in one workbook (in a single Excel file.)

Do not place more tables on any one worksheet than can be printed attractively on a single

page. You will probably use several worksheets for your planning assumptions (like tax rates, capital gains rates, etc) .

Change the name on the tabs of the worksheets you use for your planning tables to indicate the Table number and name (i.e. Table 1: Employment Income). You should have one table    per subsection (i.e., Employment Income, Business Income, etc as well as a summary tab).

Give each worksheet in your workbook a header with your name on the left and indicate the purpose of the worksheet.

Feel free to use colors and shading to enhance appearance and readability of your tables/tabs.

Never enter a number in more than one location. For example, if you have calculated the total employment income in the Employment Income table and need that number again in your

Summary sheet, use a formula in the summary sheet to link to the original number's location in the Employment Income table (i.e. =$C$18)

Use View, Page Layout to check that sheets will print readably and attractively.

Marking Guide

Grading Criteria

This is an individual assignment worth 20% of your final grade for the course.

Your report will be graded based on the following criteria:

A one-page memo addressed to your client that presents the main issues related to the tax results including the identification of and discussion about the determination of the various  sources of income.

Excel spreadsheets supporting your income calculations.

Referencing – complete and correct.

Writing and English grammar - accurate, clear, and well organized

Memo: Format and referencing (20 points)

Arial, Times, or Verdana font, size 12 point, 1.5 line spacing

Professional/business writing style. (without grammatical and/or spelling errors)

Reference all assignment material taken from other sources, including ideas , facts, and

concepts. Marks will be lost for improper or omitted referencing. Please include both in-text references and a bibliography.

Worksheets: Construction and formatting (30 points)

Comprehensive (includes all requirements)

Flexible and ‘linked’ throughout

Include all important items

Organized and logical

Clear planning assumptions

Attractively, appropriately, and consistently formatted

Submission

Electronic copy to be uploaded to Canvas by the assignment due date/time.

Due date: On or before Sunday, March 30, 2025 at 11:59 pm (PDT).

Total Marks /50

Client Information

Sacha Santorino is employed as the Associate Vice President of Product Development for Casa de

Buena Camida Ltd (CBCL), the House of Good Food, a Canadian controlled private corporation

(CCPC). CBCL creates relationships with local farmers, ranchers, fishermen/women, bakers, and

artisans, to make it easy for customers to have the freshest ingredients and products delivered

directly to homes and/or offices. CBCL has shaped its business model around valuing sustainable

farming practices, the humane treatment of animals, and the protection of the environment by caring  about how and where food is grown and produced. CBCL produced take-and-bake meals, preserves, and baked goods made fresh on-site and with full support of their community.

Sacha has requested your assistance in preparing her 2024 personal income tax return and advice  on certain other tax matters. Information regarding Sacha’s financial activities for 2024 is outlined in Exhibit A-1. Selected information from her 2023 tax return is provided in Exhibit A-2.

Required

a.  Calculate Sacha’s minimum net income for tax purposes in accordance with the format of

section 3 of the Income Tax Act, and her minimum taxable income for the 2024 taxation year.

b.  Based on your answer to part (a), calculate Sacha’s minimum federal income tax payable for the 2024 taxation year. Show all the calculations.

Exhibit A-1

1.  In 2024, Sacha received a salary of $155,000. From this income, CBCL deducted income tax  of $19,000, CPP of $3,867.50 and EI of $1,049.12. The company contributed $500 to a group term life insurance premium and $3,500 to the company’s deferred profit sharing plan. The company also contributed $4,500 to its registered pension plan on Sacha’s behalf; Sacha made a matching contribution of $4,500. Sacha also invested $16,000 in her RRSP for 2024.

2.  She received a discount of 50% on products purchased through CBCL. She estimated that the discount saved her $1,500. This discount is only available to senior management of the company.

3.  She attended a one-day convention related to her job. CBCL paid $600 for the cost of the convention. She also attended an internal sales conference arranged exclusively for the sales department. Each participant was given a $25 retail store gift card.

4.  She has to meet potential clients on a frequent basis. CBCL paid her $2,500 as a clothing allowance. She spent $5,000 on new clothing during the year.

5.  Sacha is required to use her own automobile for employment purposes. Her employer has signed a T2200 for her in this respect. She was given $2,000 as an auto allowance in 2024.

She travelled a total of 20,000 km, of which 9,000 km were for employment purposes. Her total operating cost for this year was $4,000 and on December 31, 2023, the undepreciated capital   cost allowance balance was $10,000.

6.  She received a dividend of $1,000 from the active business income of a CBCL. She also received $2,800 (net of $400 withholding tax) from a U.S. company. She paid $200 to an investment advisor for advice regarding an RRSP investment.

7.  She sold a coin collection for $2,500 on October 1, 2024. She won this collection in a lottery in

2015. The fair market value of this collection was estimated at $800 at the time of winning. She also sold some antique jewelry to a good friend for $1,500. She inherited it from her great aunt  many years ago.

8.  Sacha started a locally sourced food consulting business as a sole proprietor in 2024. Her

clientele consisted of micro-farms, local farm markets, and retail grocery chains with food services outlets. Her gross revenues for this business were $25,000 and operating expenses were $5,000. Her other expenses included a golf club membership fee of $2,000 to find potential clients, $3,000 home office expenses, and $2,000 related to business travel. She used a portion of her house as her principal place of business.

9.  In 2024, Sacha had the following other receipts and disbursements:

Donation to the Canadian Cancer Society	$500
Employee assistance counselling fee paid by CBCL	$600
Financial counselling fee paid by CBCL	$400
Business communications course tuition fee paid by CBCL	$750 (BCIT, 12 week course)

10.Sacha is married and has three children aged 7, 10, and 13. Her husband is a mechanical

engineer for a local start up technology company and earned $190,000 in 2024. Sacha’s mother also lives with her and her husband and is retired. Sacha paid her $3,000 during 2024 for helping with some casual childcare. The remainder of childcare expenses were paid to a registered afterschool care program of $12,000.

11.On January 15, 2024 Sacha received options to buy 200 shares of CBCL’s common stock at a price of $23 per share. At this time, the shares were valued at $20 per share. Sacha exercised her options on July 6, 2024, when the shares were valued at $28 per share. She plans to sell the shares next year if they increase in value.

12.CBCL granted Sacha a five-year, interest free loan of $225,000 to acquire a home. The loan

was granted on October 1, 2024, where the interest rate on open five-year mortgages was 5%. Assume the prescribed interest on employee loans was 2% on this date and remained unchanged during the year. Sacha purchased her first home for $835,000 on October 2, 2024. Sacha considered renovating the home and selling it next year to take advantage of the active real estate market where home valuations were steadily increasing. She figured her home would sell for $1,500,000 after a renovation cost of $100,000.

13. During 2024, Sacha spent $8,400 on meals and entertainment with CBCL clients; CBCL reimbursed all but $1,000 of these costs.

14. During 2024, Sacha receives several gifts from her employer:

• As a reward for winning the company's Employee of the Month Award, she receives an expense paid weekend in a local hotel. The regular price for this package was $1,200.

• Like all the company's employees, Sacha received a $600 gift certificate for merchandise at a local department store.

• CBCL provides all employees with a $450 product basket at its year-end celebration.

Exhibit A-2

Carry Forwards Summary
	From 2023	To 2024
Listed personal property losses	$1,100	$1,100
Capital Gains deduction used for qualified farm property/small business	$75,000	$75,000
Non-capital losses	$2,500	$2,500
Registered Retirement Savings Plan: Deduction limit from previous year’s Notice of (Re) assessment Maximum RRSP deduction limit for 2024	$15,000	$15,000