Mr. J.T. Taxpayer Sr. (aka J.T.T. or Taxpayer) is an administrator for a publicly traded Canadian manufacturing company. His gross salary for the year ending December 31, 2020 is $67,600. For the 2020 taxation year, Mr. Taxpayer’s employer withheld the following amounts from his income:

Federal Income Tax $11,200

Employment Insurance Premiums 856

Canada Pension Plan Contributions 2,732

Registered Pension Plan Contributions 1,800

Contributions To Group Disability Plan 150

Taxpayer’s employer made a matching contribution of $1,800 to his registered pension plan and a $175 matching contribution for the group disability insurance.

Other Information:

1. During 2020, J.T.T. is provided with an automobile by his employer. The employer acquired the automobile in 2019 for $ 25,000 plus $1,250 GST and $ 2,000 PST. The total operating costs of the car were $4,600 for the year and they were paid by the employer. The car is used by him for nine months of the year and, during the months of non-use, it must be returned to the premises of his employer. During 2020, he drives it a total of 32,000 kilometers. Of this total, 29,000 kilometers were for travel required in pursuing the business of his employer and the remainder was for personal use. He reimbursed his employer $50 per month of use for his personal use of the automobile.

2. During 2020, the disability plan provided him with benefits of $1,650 after he was injured. Taxpayer began making contributions to this plan in 2020 and paid $200 for that year. The plan provides periodic benefits that compensate for lost employment income.

3. Mr. J.T.T. was required to pay 2020 dues to his professional association in the amount of $1,233.

4. In 2019, Mr. J.T.T. was given options to buy 200 shares of his employer’s stock at a price of $75 per share. At the time the options were issued, the shares were trading at $70 per share. On June 1, 2020, he exercises the options. At the time of exercise, the shares are trading at $83 per share. He is still holding the shares on December 31, 2020.

5. Ever generous, Taxpayer donated $500 to the Canadian Cancer Society in 2019, but forgot to claim the donation in 2019. He has found the donation receipt in his files.

6. Mr. Taxpayer lives with his wife and 23 year old son, David. His wife has Net Income For Tax Purposes of $3,660. David is a full time student at university for 8 months of the year and has Net Income For Tax Purposes of $5,780. J.T.T. has paid David’s tuition for 2020 of $6,700, and in return, David has agreed to transfer the maximum credit possible to his father.

7. Taxpayer paid the following medical costs:

For Himself $2,100

For His Wife 770

For David 3,260

Total $6,130

For medical expenses the maximum not allowable is $ 2,397 or 3% of Net Income

Required:

1) Calculate Mr. J.T. Taxpayer’s minimum taxable income for the year ending December 31, 2020. Ignore all GST considerations.

2) Calculate J.T.T.’s minimum tax payable or refund.

Answer rating: 100% (QA)

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