other income and deductions including RESP

Assignment Program Nine -5 (other income and deductions including RESP) we need the whole answer

Katrina Watts is 42 years old and has custody of her two children from a previous marriage. The son is 11 years old and the daughter is 9 years old. They are both in good health. She is currently married to very successful electrician who earns an income in excess of $ 300,000 per year.

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As her children are now in school most of the year, she had decided to pursue a career in environmental design. To this end, she had enrolled, on a full time basis, at the University of Calgary. Her studies began on January 1, 2012.

As she was very successful in her first term of studies, she was able to obtain summer employment as an assistant in an environment study in Cold Lake, Alberta. As this location was over 600 kilometres from Calgary, she and her children movies to a rented cottage in Cold Lake for the period June 1, 2012 through September 1, 2012. As this was a temporary move, it was accomplished using a rented van at a total cost of $685.

During her summer in Cold Lake, Ms. Watts required someone to take care of her two children while she was at work. For this service, she paid a local retired teacher $125 per week for a period of 12 week. She has the appropriate documentation to support these costs.

She returned to Calgary on September 1, 2012in order to resume her studies at the University of Calgary. Once again, the move was accomplished using a rented van. The total cost was $826. During the fall term, she found a part time job working in a Calgary architecture firm.

On January 1, 2012, Ms. Watts did not have a Tax Free Savings Account (TFSA). In October, 2012, she opened a TFSA and deposited a total of $ 4,500. Her husband also made a contribution in the amount of $ 5,000.

During 2012, Ms. Watts received the following amounts:

Wages from Cold Lake Employment                                                                                                             $ 9, 600

Wages from Part Time Employment in Calgary                                                                                                  600

Scholarship Granted By Uni for September2012 semester                                                                4, 000

Eligible Dividends Received                                                                                                                                               3,500

Child Support Received                                                                                                                                                   10, 500

Inheritance From Aunt                                                                                                                                                    30, 000

TFSA withdrawal                                                                                                                                                                   8, 000

During November, 2012 Ms. Watts establishes RESPs for both of her children. She contributes $1,000 to each of these plans.




A.      Determine the minimum Net Income For Tax Purposes that Ms. Watts will have to report for her 2012 taxation year. Provide reasons for omitting items that you have not included in your calculations. Also, indicate any amounts that can be carried forward to future years.

B.      Provide any advice you feel would assist her in planning future actions concerning the RESPs that have been established for her children.


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