Accounting 375- Canadian Tax Principles 2020-2021

Case: Taxpayer Information

You are an accountant. You are 47 years old and married to Morgan who is 45 years old and blind. Morgan has Net Income for Tax Purposes in 2020 of $9,000, all of which is interest on investments inherited from Morgan's mother.

You and Morgan have two children, a 15 year old daughter, Haley, and a 19 year old son, Manny. Both Haley and Manny live at home. Haley earned $800 during 2020 from baby-sitting. Manny has a disability that is not severe enough for his doctor to sign off on the T2201 form.

Manny inherited investments from his grandmother and received $15,000 in interest income from them during 2020.

Your brother, Cameron, lives in the basement of your Calgary home. Cameron is 50 years old and his only income for 2020 was EI benefit payments totaling $3,000. You also supports your 85 year old father, Jay, who is physically infirm and lives in a retirement home. Jay had Net Income for Tax Purposes of $9,000 for 2020. His income consisted of OAS, investment income and payments from a registered pension plan of $1,000.

You work for ModFam Company and was paid a salary of $70,000 in 2020. You also earned a bonus of $5,000 in 2020, with one-fifth of the bonus to be paid each year from 2020 to 2024.

During 2020 you received a briefcase worth $800 as an award for being the "employee of the year" and a Christmas basket from the company worth $600. All of the Company's employees received a similar basket.

ModFam transferred you from their Calgary office to their Vancouver office in 2020. On April 1, you moved your family out of the house you had rented in Calgary for the last 10 years and into a brand new house in Vancouver that cost $800,000. Although Jay was to stay at the retirement home in Calgary, Cameron moved with the family to Vancouver. You were reimbursed by your employer for all of your moving costs. As a consequence, you have no deductible moving costs.

To help finance the new house, ModFam Company lent you $500,000 on April 1 at 1 percent interest.

ModFam provides you with a company car. While you was at the Calgary office, you had a Toyota Highlander that the company leased for $875 per month ($50 of which was for insurance). The company paid $1,600 for the Highlander's other operating costs from January 1 to March 31. During that period, you drove the car 9,000 kilometers of which 6,000 kilometers were employment related.

On April 1, the Vancouver office gave you the keys to a Toyota Camry Hybrid that was purchased for $31,300. The company paid $4,500 for the Camry's operating costs from April 1 to December 31. During that period, you drove the car 24,000 kilometers of which 10,000 kilometers were employment related.

During 2020, the following amounts were deducted from your pay:

Federal Income Tax $8,500

CPP 2,898

EI 856

Group Life Insurance Premiums 600

Registered Pension Plan 1,200

United Way Donations 1,500

The company matched the life insurance and RPP amounts.

During 2020, you paid the following amounts of eligible medical expenses:

Yourself $ 650

Morgan 1,940

Haley 860

Manny 1,250

Cameron 480

Jay 990

You paid $900 for your 2020 professional association dues. Morgan made a $500 donation to your church during 2020.

Assume that the prescribed interest rates for 2020 were 2 percent for the first and fourth quarter and 3 percent for the second and third quarter.

In 2021, you finally signed up for "My Account" and noticed that you had a non-capital loss carryover from 2015 that you had not previously deducted.

Required: For the 2020 taxation year, calculate your minimum:

-Minimum Taxable Income, Federal Tax Liability before Tax Credits, the maximum Tax Credits and Federal Tax Balance Owing (Refund). Ignore all GST considerations.