Mr. Neil Down is an employee for a publicly traded Canadian company. His gross salary for the year ending December 31, 2021, is $67,600. Mr. Down's employer withheld the following amounts from his income:

• Federal income tax $7,200
• Employment Insurance premiums $890
• Canada Pension Plan contributions $3,166
• Registered pension plan (RPP) contributions $1,800
• Contributions to group disability plan $150

Mr. Down's employer made a matching contribution of $1,800 to his registered pension plan and a $150 matching contribution for the group disability insurance.

Other Information:

1. Mr. Down is provided with an automobile that has been leased by his employer. The lease payments are $815 per month, an amount that includes all taxes and an $89 monthly payment for insurance. 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 three months it was not used, it must be returned to the premises of his employer. During 2021, he drives it a total of 32,000 kilometres. Of this total, 29,000 kilometres were for employment related use and 3,000 for personal use. He reimbursed his employer $50 per month of use for his personal use of the automobile.

2. During 2021, the disability plan provided him with benefits of $1,650 after he was injured. Mr. Down 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. Down was required to pay 2021 professional membership dues to his professional association in the amount of $1,233.

4. Mr. Down was given options to buy 200 shares of his employer's stock at a price of $75 per share two years ago. At the time the options were issued, the shares were trading at $68 per share. On June 1, 2021, Mr. Down exercises the options. At the time of exercise, the shares are trading at $83 per share. He is still holding the shares at the end of the year.

5. Mr. Down donated $500 to the Heart & Stroke Foundation in 2020 but forgot to claim the donation in 2020. He has found the donation receipt in his files.

6. Mr. Down lives with his spouse and 24-year-old son, Dan. His spouse has net income of $3,660. Dan is a full-time student at Seneca College for eight months of the year and has net income of $5,780. Mr. Down has paid Dan's tuition for 2021 of $6,700, and in return Dan has agreed to transfer the maximum tuition amount to his father.

7. Mr. Down paid the following medical expenses:

For himself $2,100

For his wife 770

For Dan 3,260

Total $6,130

Required:

1. Calculate the amount of the taxable benefit if any received by Mr. Down by virtue of his employment relating to:
   1. Use of company provided car
   2. Disability plan
   3. Stock options
2. Calculate Mr. Down's total income for tax purposes in 2021
3. Calculate Mr. Down's net income for tax purposes in 2021
4. Calculate Mr. Down's taxable income for tax purposes in 2021
5. Calculate Mr. Down's non refundable tax credits in 2021, including:
   1. Basic personal amount
   2. Charitable donations
   3. Medical expenses
   4. Tuition transferred from son
   5. CPP credit
   6. EI credit
   7. Employment credit
6. Calculate federal income tax payable/(refund).

Ignore all GST/HST & PST considerations

Answer rating: 100% (QA)

1 Mr Downs taxable benefit from the use of the company car is calculated as follows Lease payments 8... View the full answer