Canadian Tax Principles, 2022-2023 -Edition

Employment Income

For the past fve years, Mr. Brooks has been employed as a fnancial analyst by a large Canadian public company located in Winnipeg. In 2022, his basic gross salary amounts to $63,000. In addi-tion, he was awarded an $11,000 bonus based on the performance of his division. Of the total bonus, $6,500 was paid in 2022 and the remainder is to be paid on January 15, 2023.

In 2022, Mr. Brooks employer withheld the following amounts from his gross wages:

Federal income tax $3,000

Employment Insurance premiums 953

Canada Pension Plan contributions 3,500

RPP contributions 2,800

Donations to the United Way 480

Union dues 240

Payments for personal use of company car 1,000

Other Information:

1. Due to an airplane accident while fying back from Thunder Bay on business, Mr. Brooks was seriously injured and confned to a hospital for two full months of 2022. As his employer pro-vides complete group disability insurance coverage, he received a total of $4,200 in payments during this period. All the premiums for this insurance plan are paid by the employer. The plan provides periodic benefts that compensate for lost employment income.

2. Mr. Brooks is provided with a car that the company leases at a rate of $678 per month, includ-ing both GST and PST. The company pays for all the operating costs of the car, and these amounted to $3,500 in 2022. Mr. Brooks drove the car a total of 35,000 kilometres during 2022, 30,000 kilometres were carefully documented as used for employment purposes with only 5,000 kilometres for personal use. While he was in the hospital (see Item 1), his employ-ers policy required that the car be returned to the company premises.

3. On January 15, 2021, Mr. Brooks was granted options to buy 200 shares of his employers common stock at a price of $23 per share. At this time, the shares were trading at $20 per share. Mr. Brooks exercised these options on July 6, 2022, when the shares were trading at $28 per share. He does not plan to sell the shares for at least a year.

4. In order to assist Mr. Brooks in acquiring a new home in Winnipeg, his employer granted him a fve-year interest-free loan of $125,000. The loan qualifes as a home purchase loan. The loan was granted on October 1, 2022, and, at this time, the interest rate on open fve-year mort-gages was 5%. Assume the prescribed rate was 2% on this date. Mr. Brooks purchased a house for $235,000 on October 2, 2022. He has not owned a home during any of the preceding four years.

5. Other disbursements made by Mr. Brooks include the following:

Advanced fnancial accounting course tuition fees $1,200

Music history course tuition fees

(University of Manitoba one-week intensive course) 600

Fees paid to fnancial planner 300

Payment of premiums on life insurance 642

Mr. Brooks employer reimbursed him for the tuition fees for the accounting course, but

not the music course.

Required: Calculate Mr. Brooks 2022 employment income.