Question $2$

Short Case $(27$ marks$)$

Mrs$.$ Smith has asked you to prepare her $2023$ income tax return. She provides you with the following information:

RRSP Contribution in July $2023$

Registered Education Savings Plan Contribution made in $2023$

Canada Pension Plan deductions

Employment insurance deductions

Union Dues

$\backslash$table$[[$$$,9,500],[$$$,6,000],[$$$,3,754],[$$$,1,002],[$$$,1,000]]$

Mrs$.$ Smith was employed by ABC Limited, a large public corporation throughout $2023.$ Her basic $($gross$)$ salary for $2023$ is $$72,500.$ Other information related to her employment is as follows:

As part of her compensation package, she was entitled to receive a bonus of $$15,000.$ $$10,000$ of the bonus was paid on December $15,2023,$ and the balance will be paid on March $31,2024.$

Mrs$.$ Smith is provided with an all$-$expense paid vacation by her employer with a fair market value of $$8,000$ in recognition of her stellar performance during the year.

On July $1,2023,$ her employer provided her with a low interest loan in the amount of $$100,000$ to purchase shares in the company. The interest rate on the loan was $1\%$ and she must repay the loan in $2$ years. When the loan was granted, banks were charging $7\%$ interest on loans. Assume the prescribed interest rate was $5\%$ throughout $2023.$

In January $2023,$ Mrs$.$ Smith received options to buy $1,500$ shares of her employer's common shares at a price of $$33$ per share. At this time the shares were trading for $$28$ per share. On July $1,2023,$ Mrs$.$ Smith exercised her options when the shares were trading at $$40\mathrm{.}00$ per share.

In $2023,$ Mrs$.$ Smith was injured at work and was off work for $1$ month. During that period, she received $$3,000$ in Worker Compensation benefits.

Her employer offers a defined contribution Registered Pension Plan $($RPP$).$ For $2023,$ Mrs$.$ Smith and her employer each contributed $$3,000$ to this plan. Her employer also contributed $$3,800$ into a Deferred Profit$-$Sharing Plan $($DPSP$)$ in $2023$ on behalf of Mrs$.$ Smith. The contributions made by Mrs$.$ Smith and her employer into the RPP and DPSP are the same as those made in $2022.$ Assume Mrs$.$ Smith's $2022$ Earned Income for RRSP purposes was equal to her $2023$ Earned Income. On January $1,2023,$ Mrs$.$ Smith had no unused deduction room and no contributions which she did not deduct in prior years in her RRSP account.