Comprehensive Case

Michael Moor is 47 years old and is a Personal Financial Planner at the A+ Financial Planning Ltd (AFP). AFP is a large Canadian controlled private corporation (CCPC).

Because of his outstanding work during 2018, he has been awarded a $20,000 bonus. The bonus will be paid in 2022 and 2023 at the rate of $10,000 each year to help ensure he stays with the Company. As Michael expects to remain at the Company for the rest of his working life, he accepts the delayed payment with no complaints and minimal misgivings.

His Employer withheld the following amounts from his salary of $143,000.00:

Income Tax withholdings

$20,000.00

EI premiums

858.22

CPP contributions

2,593.80

Professional association dues

3,400.00

Disability Insurance Premiums*

550.00

United Way contributions**

2,500.00

Registered pension plan contributions***6,800.00 Reimbursement for Automobile Use600.00

*Disability premiums are matched by AFP.

**This is the first time that Michael or his spouse have ever contributed to a registered charity

*** On his behalf, the employer also made a contribution to the RPP of $4,600.

Other Information:

1.Michael's spouse, Leslie Moor is 46 years old and is in good health. Her Net Income For Tax Purposes is $8,460.

2.The Moors have three children. Information on these children is as follows:

Sharon is 17 years old, in good health, and has income from part time jobs of $7,625.

Suzanne is 19 years old and has serious breathing problems that prevent her from working on a full-time basis. She lives with Michael and Leslie and has income from part time jobs of $7,250.

Samantha is 23 years old and attends university on a full-time basis for 11 months of the year. Michael pays her tuition fees of $10,300, along with textbook costs of $1,100. She lives with Michael and Leslie and is in good health. She has investment income of

$12,800. The investments were purchased with income from part-time jobs during her high school years.

3.Michael was on disability benefits for 6 weeks in 2018. He received $6,200 in disability benefits for lost wages. Disability premiums paid by Michael totaled $2,450 by the end of 2018.

4.Michael is provided with an automobile by his employer. The vehicle is used largely for employment related activity. Total mileage for 2018 was 62,000 kilometers, with only 4,000 of this being personal use. The vehicle is leased by his employer at a rate of $456 per month, including a payment for insurance of $43 per month. It is available to Michael for 10 months during 2018. During the other 2 months, the employer required that it be returned to their garage.

5.In 2015, Michael received options to purchase 300 shares of his employer's common stock at a price of $72 per share. At the time the options were granted, the market price of the stock was $70 per share. In January, 2018, when the shares are trading at $85 per share, Michael exercises all of the options. He is still holding these shares at the end of the year.

6.During 2018, Michael receives several gifts from his employer:

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

-As is the case for all of the company's employees, Michael received a $600 gift certificate for merchandise at a local department store.

-At Christmas, the company provides each employee with a basket of gourmet food. The value of this basket is $450.

7.During 2018, Michael spent $8,400 on employment related meals and entertainment with clients of his employer. His employer reimbursed all but $1,000 of these costs.

8.During 2018, Michael donated $300 to each of the three major federal political parties.

9.During 2018, Michael and Leslie decide to purchase their first family home (they have rented for the last 15 years). After considerable searching, they identify the perfect property one block from their rented apartment and purchase it for $462,000. As is his employer's policy, he is granted an interest free loan of $200,000 to assist with this purchase. The loan was granted on April 1, 2018. Assume that the prescribed rate is 2 percent throughout 2018.

10.Michael is planning for early retirement and contributed $2,000 to his RRSP in 2018.

11.During 2018, both Sharon and Samantha had rhinoplasty surgery. Michael had to pay $2,800 for emergency services after Sharon's nose suffered serious trauma during a martial arts class. He also paid $13,500 for rhinoplasty surgery to reduce and reshape Samantha's nose which she believes has greatly improved her appearance. These amounts are included in the following medical expenses of the family, all of which were paid by Michael:

Michael And Leslie

$ 2,200

Sharon

3,100

Suzanne

12,300

Samantha

16,000

Part A

Using section 3 ordering rules, calculate, for the 2018 taxation year, your minimum employment income, Net Income For Tax Purposes and Taxable Income.