It is February 12, 2021 and Mackenzie and Jayden have come to ask you some questions regarding their 2020 tax returns. The couple lives in a common-law relationship. Jayden is a chef at Posh Hotel and Mackenzie is an electrician. Jayden’s remuneration (salary) in 2020 was $84,000. The following information is available from Jayden’s 2020 T4 slip: Deductions from pay: CPP and EI 3,754 Registered Pension Plan Contribution 2,000 Income tax deducted 25,000 Posh contributes an equal portion to Jayden’s RPP. Jayden is also provided with a company car for use during the entire year. The car is leased by Posh. Lease payments are $550 per month. Posh pays $400 per month for the operating costs of the vehicle. Jayden drove the car a total of 22,000 kilometres in 2020. 9,000 of these were for personal travel. Jayden also earned $3,000 in 2020 from Posh’s dining room tip pool. Lux did not report the tips on Jayden’s T4. CPP enhanced contribution is $166. Jayden withdrew $10,000 from an RRSP in 2020 for use other than education or home ownership. Both Jayden and Mackenzie contribute to their TFSAs each year. They each have a balance of $8,000 in their TFSAs, bearing 3% annual interest. Mackenzie earns $65,000, and is waiting for the 2020 T4 from the electrical company to arrive in the mail, so will address some other issues at this point in time which might affect the 2020 taxes. 1) Mackenzie sold a small piece of land in 2020 (which is capital in nature) for $68,000. The land originally cost $50,000. Selling costs were $800. Proceeds of $35,000 were received in 2020 and the remainder of the funds will be received this year (2021). 2) Mackenzie began a small farming operation on the couple’s acreage in 2020. The farm revenue totaled $5,000 in 2020 and expenses were $17,000. Mackenzie has never farmed before, but the business looks promising and a significant increase in sales is expected in 2021. Required: A. Calculate Jayden’s minimum net income for tax purposes, and taxable income, for 2020. Show your work using the statutory formula from Section 3 of the Income Tax Act. B. Calculate the 2020 tax consequences from Mackenzie’s two issues. (Work must be shown for marks to be awarded.)

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A Calculate Jaydens minimum net income for tax purposes and taxable income for 2020 Show your ... View the full answer