6-15

AP 6-15 (Comprehensive Case Covering Chapters 1 to 6) Personal Information Hillary Hawk has been divorced for some time and has sole custody of her two children, Mark and Mandy. Mark is 13 and Mandy turned 18 on July 1,2022. Hillary does not receive any child support or spousal support from her former husband. Mark is in high school and has no income of his own. In 2022, her daughter, Mandy, was enrolled part time at a local college. Hillary agreed to pay her tuition of $1,800 as long as Mandy transferred the related credit to her (Hillary). Mandy's 2022 net income is $6,300 : During the year, Hillary paid $8,000 for orthodontic work (braces) for Mark. She was reimbursed 50% of the amount through her employer's dental and health plan. In 2022, Hillary made $2,300 of contributions to registered charities. Employment Information Hillary is a sales representative for Bronze Age Inc. (BA), a Canadian public company that specializes in the marketing of metal sculptures. Hillary's employment contract specifies a base salary of $100,000 plus a commission of 2% of her annual cash sales. In 2022, Hillary's cash sales were $4,800,000. In 2022. Hillary's employer withheld the following amounts from her salary: Employment Information Hillary is a sales representative for Bronze Age Inc. (BA), a Canadian public company that specializes in the marketing of metal sculptures. Hillary's employment contract specifies a base salary of $100,000 plus a commission of 2% of her annual cash sales. In 2022, Hillary's cash sales were $4,800,000. In 2022, Hillary's employer withheld the following amounts from her salary: - The plan is funded 50/50 by the employees and the employer. Hillary is covered by BA's group term life insurance. Her coverage is equal to her annual base salary ($100,000 for 2022). BA pays a premium to the insurance company of $3 for every $1,000 of coverage. Because of her outstanding sales performance, Hillary received the Salesperson of the Year Award. This award provided her with a cash payment of $1,000, plus an iPad Pro that cost $1,700. In 2022 , BA provides Hillary with an automobile that it leases for $650 per month. The automobile was available for her personal use throughout 2022. During this period, she drove the car 42,000 kilometres, of which 38,000 were used for employment and 4,000 for personal use. While BA pays $2,800 to provide Hillary with insurance on the vehicle, they do not pay any of the other operating expenses. Hillary is responsible for her salesperson expenses (incluging the automobile operating expenses). In 2022 she incurred the following: Hillary meets all of the conditions of ITA 8(1)(f) of the ITA (deductible salesperson expenses). She has a T-2200 from her employer. Hillary is responsible for her salesperson expenses (including the automobile operating expenses). In 2022 she incurred the following: Hillary meets all of the conditions of ITA 8(1)(f) of the ITA (deductible salesperson expenses). She has a T-2200 from her employer. Last year, in July 2021. Hillary's employer transferred her from the Kelowna office to the Vancouver office. All her moving expenses were paid by her employer. Because she needed to sell her Kelowna home quickly, a $38,000 loss was incurred on the sale. While her employer agreed to compensate Hillary for $25,000 of this loss, the payment was not received until February 2022. In April 2020. Hillary's employer granted her the right to purchase up to 3,000 shares of BA for $27 per share under the employee stock option plan. At the time the option was granted, the shares were trading for $25. On March 1, 2022, when the shares were trading at $29 per share, she exercised all of these options. In December 2022, she sold 2,000 shares of the acquired option shares for $33 per share. In order to purchase the 3,000 shares, Hillary negotiated an interest-free loan from her employer for the purchase price. The loan was received on March 1, 2022. Joan repaid the loan in full on December 31, 2022. In order to purchase the 3,000 shares, Hillary negotiated an interest-free loan from her employer for the purchase price. The loan was received on March 1,2022 . Joan repaid the loan in full on December 31, 2022. Business Information In addition to her employment income, Hillary carries on a business, as a sole proprietor, that advises individuals and corporations on purchases of various types of art for their homes and offices. Hillary uses 15% of the livable space, including a component for common areas, in her Vancouver home for this business. Her 2022 home expenses include the following: Hillary estimates only 10% of the internet use was for her business because her children stream a lot of entertainment on a variety of devices. She does not claim CCA on her home as she realizes that if she did, this would result in future recapture and capital gains implications. On January 1, 2022, the business had the following UCC balances: Class 8 Class 10.1 $6,91212,495 In 2022, she acquires additional class 8 property at a capital cost of $12,000. She also sold class 8 property with a capital cost of $9,000 for $1,200. The class 10.1 passenger vehicle had a capital cost $36,000. It was sold in 2022 for $16,000 and replaced with a new passenger vehicle with a capital cost of $41,000. The vehicle is not a zeroemission vehicle. Both vehicles were used solely for the business. She uses the employer-provided automobile for any personal travel. In 2022, the business income, determined using ASPE, was $63,000. Included in this amount were the following generally accepted accounting principles. Required: For the 2022 taxation year, calculate Hillary's minimum: 1. net income, 2. taxable income. Required: For the 2022 taxation year, calculate Hillary's minimum: 1. net income, 2. taxable income, 3. federal income tax payable or refund. In determining these amounts, assume the prescribed rate during all four quarters of 2022 is 2%. Ignore any GST/HST \& PST considerations. 10. For Question AP 6-15, show all calculations for: a. 2022 Employment Income (with detailed explanations on inclusions/exclusions) b. Automobile Benefit, if applicable c. 2022 Business Income d. Maximum CCA, if applicable e. Taxable Capital Gain details, if applicable f. 2022 Net Income g. 2022 Taxable Income h. 2022 Federal Income Tax Payable, including all Tax Credits and why the tax credits apply. i. Provide detailed calculations and explanations for any Medical Expense Credit, Tuition Credit, Charitable Donations, etc