$($a$)$ Determine Cynthia$$s net income for tax purposes in accordance with the format of Section $3$ of

the Income Tax Act for the $2023$ taxation year. Hint: Demonstrate that you can use the Statutory

Formula. If your answer is incorrect and your process is logical than there could be part marks. $(5$

marks$)$

$($b$)$ Based on your answer to part $($a$),$ calculate Cynthia$$s federal income tax liability for the $2023$

taxation year. Hint: Demonstrate that you can calculate using tax brackets and tax credits. If your

answer is incorrect and your process is logical than there could be part marks. $(10$ Marks$)$

Your response should not exceed $2$ pages. Clearly indicate the names of both students on your report.

Cynthia Dale is $62$ years old and retired from her employment with Lego Ltd$.,$ a Canadian public

corporation, on September $30,2023.$

Cynthia has asked you to help her prepare her $2023$ tax return and to advise her on certain other tax

matters. Information regarding her financial activities for $2023$ is summarized below.

$1.$ Cynthia$$s gross salary, to September $30$th$,$ was $$85,000.$ From the amount, Lego withheld CPP and

EI premiums totalling $$4,756,$ of which $$631$ were CPP enhanced contribu$$ons$.$ In addi$$on to

salary, Lego paid $$10,000$ directly into Cynthia$$s RRSP at a local bank.

$2.$ Cynthia used the employer$$s automobile un$$l her re$$rement$.$ Lego paid the monthly lease cost of

$$400$ plus monthly opera$$ng expenses of $$200.$ Between January $1$ and September $30,$ Cynthia

drove the car a total of $16,000$ km$,$ of which $4,000$ km were for personal use.

$3.$ Cynthia incurred and paid medical expenses of $$5,000$ in the year.

$4.$ In $2020,$ Lego granted Cynthia an option to acquire up to $5,000$ of its shares at $$8$ per share. At

that time, the shares were trading at the same price. In January $2023,$ she purchased $3,000$ shares

when they were trading at $$10$ per share. She purchased an additional $1,000$ shares in July, when

they were trading at $$15$ per share. In November, Cynthia sold $2,000$ shares at $$20$ per share after

receiving a cash dividend $($eligible$)$ of $$800.$