You will be able to see the answers by selecting the "Show answers" button after the scenario and
information.
This exercise uses a simplified version of the income tax and benefit return to show you the basic calculations
for each step.
The amounts shown are not actual tax brackets, tax rates or credit values. Do
not use them to do your taxes or to check calculations done by certified tax software or on
official paper tax forms.
Certified tax software will calculate most amounts based on the information you input. These amounts are provided
to you for you to complete this exercise manually.
If you are a resident of Quebec, you will complete a separate provincial tax return with Revenu
Québec.
Select a scenario to get started
Jonah quits the bakery
Jonah worked full-time at a local bakery last year until July, when he quit his job to travel for a month
before going back to school.
He did not have any additional income for the year.
Jonah received a T4 slip, Statement of Remuneration Paid, from the bakery.
Details of Jonah's T4 slip
Employer's name: Casey's Bakery
Employee's name and address:
Last name: Smith
First name: Jonah
Address:
1 Home Avenue
City, Newfoundland and Labrador, X0X 0X0
Use the information to fill out the simplified tax return to find out if Jonah will get a refund or have a
balance owing.
For this example, you will be able to validate your amounts, calculations and final answer at the end of the
exercise.
Terry keeps track of tips
Terry is 18 and works at a pizza restaurant, where she earns hourly wages and tips.
Last year Terry received $997.60 in cash tips, in addition to her salary. Terry kept track of her cash tips
because her employer does not record this information.
Terry received a T4 slip, Statement of Remuneration Paid, from her employer.
Use the information to fill out the simplified tax return and determine if Terry is getting a refund or has a
balance owing.
For this example, you will be able to validate your amounts, calculations and final answer at the end of the
exercise.
Farah gets a degree
Farah is working part-time at a local bookstore and is pursuing her degree on a part-time basis at the City
College which granted her a scholarship. She also receives income support from the Ontario Disability
Support Program. To help Farah with her tuition fees, she received payments from her registered education
savings plan (RESP).
Farah has a physical impairment and has been deemed eligible to claim the disability tax credit (DTC).
Although Farah is attending school part-time, she is considered a full-time student for scholarship
exemption purposes because she is eligible for the DTC.
Farah received a T5007, Statement of Benefits, from Income support from the Ontario Disability Support Program
(ODSP).
Details of Farah’s T5007 slip
Recipient’s name and address:
Last name: Awan
First name: Farah
Address:
123 Main Street
City, Ontario, X0X 0X0
Income and other information:
Box 11: Social assistance payments or provincial or territorial supplements – $14,000.00
Box 12: Social insurance number – 000 000 000
Farah received a T4 slip, Statement of Remuneration Paid, from her employer.
Details of Farah’s T4 slip
Employer’s name: Local Bookstore
Employee’s name and address:
Last name: Awan
First name: Farah
Address:
123 Main Street
City, Ontario, X0X 0X0
Income and other information:
Box 10: Province of employment – ON
Box 12: Social insurance number – 000 000 000
Box 14: Employment income – $10,000.00
Box 16: Employee’s CPP contributions – $385.00
Box 18: Employee’s EI premiums – $150.00
Box 22: Income tax deducted – $0.00
Box 24: EI Insurable earnings – $10,000.00
Box 26: CPP/QPP pensionable earnings – $10,000.00
Farah received a T4A slip, Statement of Pension, Retirement, Annuity, and Other Income, from her school for her
scholarship.
Details of Farah’s T4A slip
Payer’s name: City College
Recipient’s name and address:
Last name: Awan
First name: Farah
Address:
123 Main Street
City, Ontario, X0X 0X0
Other information:
Box 12: Social insurance number – 000 000 000
Box 105: Scholarships, fellowships, bursaries, and artists' project grants (explained on reverse side of
slip) – $4,500.00
Farah received a T4A slip, Statement of Pension, Retirement, Annuity, and Other Income, from her financial
institution for her RESP payments.
Note: Your financial institution will only report the taxable portion of your RESP payments on
your T4A slip.
Details of Farah’s T4A slip
Payer’s name: Financial Institution
Recipient’s name and address:
Last name: Awan
First name: Farah
Address:
123 Main Street
City, Ontario, X0X 0X0
Other information:
Box 012: Social insurance number – 000 000 000
Box 042: RESP educational assistance payments (explained on reverse side of slip) – $5,700.00
Farah received a Form T2202, Tuition and Enrolment Certificate, from her school for her tuition fees.
Details of Farah’s Form T2202
Name and address of designated educational institution:
City College
1 Study Road
City, Ontario, X0X 0X0
Additional information:
Box 11: School type - 2 (College)
Box 13: Name of program or course - Degree
Box 14: Student number - 123456789
Box 17: Social insurance number (SIN) - 000 000 000
Student’s name: Farah Awan Student address:
123 Main Street City, Ontario, X0X 0X0
Session periods 1:
Box 19: From YY/MM - XX/01
Box 20: To YY/MM - XX/04
Box 21: Number of months part-time - 4
Box 23: Eligible tuition fees, part-time and full-time - $3,000.00
Session periods 2:
Box 19: From YY/MM - XX/09
Box 20: To YY/MM - XX/12
Box 21: Number of months part-time - 4
Box 23: Eligible tuition fees, part-time and full-time - $3,000.00
Totals:
Box 25: Total number of months part-time - 8
Box 26: Total eligible tuition fees, part-time and full-time - $6,000.00
Use the information to fill out the simplified tax return to find out if Farah will get a refund or have a
balance owing.
For this example, you will be able to validate your amounts, calculations and final answer at the end of the
exercise.
Note: Before you proceed
if you have filled out a previous scenario.
Step 1: Identification
Enter the individual's personal information.
Review the tax information and enter the information in the correct spaces.
Name: Jonah Smith
SIN: 123 456 789
Name: Terry Lee
SIN: 777 777 777
Name: Farah Awan
SIN: 000 000 000
Name
Social Insurance Number
Compare your answers to the answers provided at the end of the exercise.
Step 2: Total income
Calculate the individual's total income.
Review the tax information and complete the calculations.
Jonah’s total income includes:
the employment income of $18,000.00 shown in box 14 of his T4 slip
He did not have any additional income.
Terry’s total income includes:
employment income of $12,000.00 shown in box 14 of her T4 slip
cash tips received for an amount of $997.60 not shown on an information slip
Farah’s total income includes:
the employment income of $10,000.00 shown in box 14 of her T4 slip
additional income:
income support from the ODSP of $14,000.00 shown in box 11 of her T5007
slip
payments of $5,700.00 from her RESP shown in box 042 of her T4A slip
Note: Farah does not need to report her scholarship as income when she does her taxes
because she is eligible for the DTC and is considered a full-time student for scholarship exemption
purposes.
Farah may also receive additional grants from federal, provincial or territorial governments.
Enter income
Plus additional income
Equals the total income
Compare your answers to the answers provided at the end of the exercise.
Step 3: Net income
Calculate the individual's net income.
Review the tax information and complete the calculations.
Jonah’s deductions for calculating net income are $950.00.
What his deductions include
registered pension plan (RPP) contributions shown in box 20 of his T4 slip
union dues shown in box 44 of his T4 slip
enhanced Canada Pension Plan (CPP) contributions, calculated using CPP contributions shown in box 16
of his T4 slip
Terry’s deductions for calculating net income are $625.00.
What her deductions include
RRSP contributions shown on a receipt
an image of this receipt is not provided here
enhanced CPP contributions, calculated using CPP contributions shown in box 16 of her T4 slip
Farah’s deductions for calculating net income are $65.00
What her deductions include
enhanced CPP contributions, calculated using CPP contributions shown in box 16 of her T4 slip
Enter the total income
from Step 2
Minus the total deductions
for calculating net income
Equals the net income
Compare your answers to the answers provided at the end of the exercise.
Step 4: Taxable income
Calculate the individual's taxable income.
Review the tax information and complete the calculations.
Jonah's deductions for calculating taxable income are $0.00.
Terry's deductions for calculating taxable income are $0.00.
Farah's deductions for calculating taxable income are $14,000.00 from the ODSP as this
income is not taxable.
Enter the net income
from Step 3
Minus the total deductions
for calculating taxable income
Equals the taxable income
Compare your answers to the answers provided at the end of the exercise.
Step 5: Federal tax
Calculate the federal tax.
Part A: Calculate the federal tax using the correct tax bracket
To calculate Jonah's federal tax:
To calculate Terry's federal tax:
To calculate Farah's federal tax:
Select the tax bracket
Enter the taxable income from Step 4 in the column for the appropriate tax bracket
Use the table below to complete the calculation in that column
Tax brackets (fill in only one tax bracket)(fill
in tax bracket 1)(fill in tax bracket 2)(fill in tax bracket 3)(fill
in tax bracket 4)
Tax bracket
1
Tax bracket
2
Tax bracket
3
Tax bracket
4
Taxable income
$49,999 or less
$50,000 to $99,999
$100,000 to $149,999
$150,000 or more
Enter thetaxable incomefrom Step 4
Enter the taxable incomefrom Step 4 (Answer)
Enter the taxable incomefrom Step 4 (Answer)
Enter the taxable incomefrom Step 4
Subtract this amount from taxable
income
minus 0.00
minus 49,999.00
minus 99,999.00
minus 149,999.00
Equals taxable income subject to federal tax
rate
equals
equals
equals
equals
Equals taxable income subject to federal tax
rate (Answer)
Equals taxable income subject to federal tax
rate (Answer)
Equals taxable income subject to federal tax
rate(Answer)
Multiply by the federal tax rate
multiplied by 10% (Multiply by 0.10)
multiplied by 20% (Multiply by 0.20)
multiplied by 30% (Multiply by 0.30)
multiplied by 40% (Multiply by 0.40)
Equals taxafter
multiplying by the federal tax rate
equals
equals
equals
equals
Equals taxafter
multiplying by the federal tax (Answer)
Equals taxafter
multiplying by the federal tax (Answer)
Equals taxafter
multiplying by the federal tax rate (Answer)
Add federal tax calculated on incomein the lower tax brackets
plus 0.00
plus 4,999.90
plus 14,999.70
plus 29,999.40
Equalsfederal tax on taxable income
equals
equals
equals
equals
Equalsfederal tax on taxable income (Answer)
Equalsfederal tax on taxable income (Answer)
Equalsfederal tax on taxable income (Answer)
Reminder: This exercise is using simplified tax rates. They are
different than the tax rates used on the actual tax return.
Part B: Calculate the federal tax using non-refundable tax credits
Review the tax information and complete the calculations.
Jonah’s federal non-refundable tax credits are $16,500.00.
What his non-refundable tax credits include
the basic personal amount
CPP contributions calculated using amounts shown in box 16 of his T4 slip
employment insurance (EI) premiums shown in box 18 of his T4 slip
the Canada employment amount
tuition amounts calculated using amounts shown on a T2202, Tuition and Enrolment Certificate
an image of this form is not provided here
Jonah’s eligible medical expenses, including premiums for private health services plan
shown in box 85 of his T4 slip
Terry’s federal non-refundable tax credits are $15,000.00.
What her non-refundable tax credits include
the basic personal amount
CPP contributions calculated using amounts shown in box 16 of her T4 slip
employment insurance (EI) premiums shown in box 18 of her T4 slip
the Canada employment amount
Farah’s federal non-refundable tax credits are $26,265.00.
What her non-refundable tax credits include
the basic personal amount
CPP contributions calculated using amounts shown in box 16 of her T4 slip
employment insurance (EI) premiums shown in box 18 of her T4 slip
the Canada employment amount
disability amount (for self)
Enter the federal non-refundable tax
credits
Multiply by the federal non-refundable tax credit rate Multiply by 0.10
10%
Equals the total federal non-refundable tax credits amount
Enter the federal tax on taxable
income
from the table above
Minus the total federal non-refundable tax credits amount
Equals the federal tax
If negative, enter "0"
(Remember, non-refundable tax credits can only reduce tax to zero.)
Note 1: Farah chose to transfer her tuition credits to her parents. Any remaining unused tuition credits will be carried forward to reduce the taxes she owes in a future year.
Note 2: Farah also chose to transfer her unused DTC to one of her parents.
Provincial or territorial tax
You will do a similar calculation to figure out the provincial or territorial taxes you might owe. You will
report this amount in Step 6.
Note: If you lived in Quebec on December 31 of the tax year, you will calculate your
provincial taxes by completing a separate provincial tax return for Revenu Québec.
Compare your answers to the answers provided at the end of the exercise.
Step 6: Refund or balance owing
Calculate to see if the final result is a refund or a balance owing.
Review the tax information and complete the calculations.
Jonah's provincial tax is $16.00
When you do your taxes, a similar calculation is done for provincial or territorial taxes as for
federal tax (Step 5).
For this exercise, the completed calculation is provided.
Jonah’s total income tax deducted at source is $2,209.80, as shown in box 22 of
his T4 slip
Jonah’s refundable tax credits are $0.00
Terry’s provincial or territorial tax is $0.00
When you do your taxes, a similar calculation is done for provincial or territorial taxes as for
federal tax (Step 5).
For this exercise, the completed calculation is provided.
Terry’s total income tax deducted at source is $200.00, as shown on her T4 slip
Terry’s refundable tax credits are $25.00.
What her refundable tax credits include
CPP overpayments, calculated using amounts shown in box 16 of her T4 slip
EI overpayments, calculated using amounts shown in box 18 of her T4 slip
Farah’s provincial or territorial tax is $0.00
When you do your taxes, a similar calculation is done for provincial or territorial taxes as for
federal tax (Step 5).
For this exercise, the completed calculation is provided.
Farah’s total income tax deducted at source is $0.00, as shown in box 22 of her T4 slip
Farah’s refundable tax credits are $1,600.00.
What her refundable tax credits include
Farah’s Canada workers benefit (CWB) including the CWB disability supplement.
Enter the federal tax
from Step 5
Plus the provincial
or territorial tax
Equals the total payable
Enter the tax deducted at
source
Plus the eligible refundable tax
credits
Equals the total credits
Enter the total payable
Minus the total credits
Equals the final result
A positive result represents a balance owing, and a negative result represents a refund.
Compare your answers to the answers provided at the end of the exercise.
