Bert Flynn works as the Vice President of Distribution for Boyd Enterprises Inc., a public company headquartered in Calgary, Alberta.  Bert began working for Boyd in February 2022.  Prior to this, he was a partner in an unincorporated business in Toronto.  Boyd made him an offer he could not refuse, so he made the move, and Boyd reimbursed him his actual moving expenses of $30,250.

 

In 2022, Bert earned a salary of $86,789 from Boyd.

 

Other Information:

 

1. Bert's duties required him to use his own automobile in the course of his work.  To compensate him for his costs, Boyd gave him an automobile allowance of $200 per month plus $0.17 per employment related kilometre.  These payments began the month Bert joined the company in February.  Bert's actual total automobile costs, including available CCA and operating expenses, totalled $8,000.  The car was driven 40,000 kilometres, of which 10,000 kilometres were driven in the course of his employment.

 

1. Bert's share of income from the business that he left in Toronto totalled $6,000 for 2022.

 

1. During 2022, Bert invested in a new partnership ("GF International") that imported and distributed gluten-free products.  In its first year of business in 2022, GF International lost a large amount of money due to substantial promotional expenses, but the prospects for future profits were high.  Bert's share of these losses was $160,000.

 

1. Bert speculated in stocks during 2022 and earned a capital gain of $10,000 on the sale of some shares in a biotech company, but, unfortunately, he lost $30,000 on the sale of shares in a computer company.

 

1. Bert set-up one of the rooms in his home to be used exclusively as an office, in which, he would regularly meet customers and others who found it more convenient to meet him at his home rather than driving all the way into town to meet him at Boyd's offices.  It was one of the requirements of his employment that Bert set-up such an office, and it was normal for Bert to work out of his home office about 1 day a week, on average.  Bert estimated that the room constituted 10% of the floor space of his home.  His total household expenses in 2022 were as follows:
2. Maintenance                                                                $2,000
3. Hydro, Utilities                                                                        $3,000
4. Office supplies consumed in course of employment   $300
5. Mortgage interest                                                         $2,000

 

REQUIRED:

 

1. Determine Bert's 2022 net income for tax purposes using the ordering rules of section 3.  Show the subdivision for each item included in the calculation, indicate "n/a" for items that are not included in the computation and identify any loss carryovers. 

 

1. Assume that Bert's 2022 net income for tax purposes is $110,000, and he is eligible for $5,000 of Division C deductions and also for the basic personal tax credit.  Based on that, calculate the minimum 2022 federal income tax payable for Bert and provide the applicable marginal and average tax rates.  Show all calculations.  

Answer rating: 100% (QA)

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