AP 4-7 (Comprehensive Tax Payable)

Margarita Dalvi is a fnancial analyst employed by a large public company. Her salary in 2022 is

$143,000, none of which is commission income. Her employer does not require that she pay any

travel or other expenses. In addition, she was awarded an incentive bonus of $34,500. Two-thirds

of this bonus was paid in 2022, with the balance due in September 2023.

Ms. Dalvis employer withheld the following amounts from her earnings:

EI premiums $ 953

CPP contributions 3,500

RPP contributions 6,400

Federal income tax 29,000

Contributions to United Way, a Canadian registered charity 4,000

Professional association dues 1,200

Ms. Dalvi is 55 years old and married to Jonathan Dalvi, who has been legally blind since an auto-mobile accident that occurred several years ago. Jonathan turned 65 years old in December 2022.

He has 2022 income from investments of $7,200. The couple has three children:

Martha is 15 years old. She has 2022 net income from various part-time jobs of $11,000.

Mary is 19 years old and has mental health problems that prevent her from working on a

full-time basis. She lives with her mother and father and has 2022 income from part-time

jobs of $4,800.

Mark is 21 years old and attends university on a full-time basis for 10 months of the year.

His tuition fees were $9,400 and paid for by Ms. Dalvi. As he has no income of his own, he

has agreed to transfer the maximum tuition amount to his mother.

The familys 2022 medical expenses, all of which were paid by Ms. Dalvi, were as follows:

Ms. Dalvi and her husband $ 6,200

Martha 1,800

Mary 11,300

Mark 2,500

Other Information:

Ms. Dalvi is provided with an automobile by her employer. The automobile is leased at

a rate of $728 per month, including HST. The lease payment includes $50 per month for

insurance coverage. In 2022, the automobile is driven 57,000 kilometres, of which 42,000

were for employment purposes and 15,000 were for personal use. The automobile was

used by Ms. Dalvi for 11 months of 2022. She was required to return the automobile to her

employers garage during the month she did not use it.

In 2022, Ms. Dalvi spent $14,800 on employment-related meals and entertainment with clients

at local establishments. Her employer reimbursed $9,500 of these costs.

Throughout their marriage, the Dalvis have always lived in rented premises. Seeing the current

level of mortgage rates as presenting an opportunity to acquire a residence, they purchase

a four-bedroom bungalow in the same neighbourhood for $422,000 on July 1, 2022. On this

date, her employer provides Ms. Dalvi with a $250,000 interest-free loan that will facilitate

the purchase. However, the balance must be paid in full on July 1, 2027. Assume that the

prescribed rate is 1% throughout 2022.

4. In 2022, Ms. Dalvi receives several gifts from her employer:

As is the case for all of her employers senior staff, she receives a $400 gift certificate

that can be used for merchandise at a local clothing store.

In recognition of 10 years of continuous service, she receives an engraved wristwatch.

The retail value of this watch is $1,200.

At Christmas all of the employees of her employer receive a gift basket containing

gourmet food items. The retail value of this basket is $300.

5. Ms. Dalvi received stock options to purchase 1,200 shares of her employers stock at a price of

$37 per share in 2020. At the time the options were granted, the FMV of the shares was

$40 each. In July 2022, when the shares are trading at $45 per share, Ms. Dalvi exercises all of

the options. She continues to own the shares as of December 31, 2022.

Required:

A. Determine Ms. Dalvis 2022 minimum net income.

B. Determine Ms. Dalvis 2022 minimum taxable income.

C. Based on your answer in Part B, determine Ms. Dalvis 2022 federal income tax payable or

refund.