4)

Question 4 (19 marks)

Mark and Susan McGraw have two children: a 12-year-old girl who has been blind since birth, and a 15-year-old boy. During 2020, Susan worked part time and had net income for tax purposes of $6,450. During 2020, Mark worked full time for a publicly traded company and earned a base salary of $90,000 plus commissions of $11,500 and a bonus of $28,000. NONE of the bonus was paid until January 2021. Maximum Canada Pension Plan (CPP) and Employment Insurance (EI) amounts were deducted from his pay cheques.

Other information is as follows:

1. Marks employer provides him with an automobile that is leased for $925 per month (which includes an insurance fee of $75). During 2020, the automobile was driven a total of 62,000 kilometres, of which 30,000 kilometres involved employment-related activities. Mark paid all the operating costs ($10,300) in 2020 and was NOT reimbursed by his employer. The automobile was available to Mark throughout 2020.
2. Mark was NOT reimbursed for advertising, entertainment, or travel costs. Marks employer required him to incur these expenses and provided a T2200 form. In addition to the operating costs for Marks vehicle, he paid for the following employment-related costs:

Meals with clients	$ 6,420
Hotels	10,350
Advertising	12,400
Entertainment	6,500
Mortgage interest	7,455
Total	$43,125

3. Mark owns shares in Royal Nova Bank Inc. In 2020, he sold 4,000 shares with an adjusted cost base of $17 per share for proceeds of $22 per share.
4. Marks 2019 notice of assessment stated that he has a carryforward non-capital loss in the amount of $1,500 and net capital losses of $25,000.

Required:

1. Determine Marks minimum net income for tax purposes for the 2020 taxation year. (10 marks)
2. Determine Marks minimum taxable income for the 2020 taxation year and any carryforward balances that he should be aware of for future years. (2 marks)
3. Determine Marks minimum federal income tax payable for 2020. (7 marks)