Christopher Dunn is 37 years old. He has been married to Kathy Dunn for 12 years. In 2022, Kathy has net income of $8,200, all from investments. In 2022, Christopher works 275 hours as a volunteer firefighter in his local community. He did not receive any compensation for this work.

After many years of renting, on February 1, 2022, Christopher and Kathy purchase a new residence for $432,000. The property is financed with a $200,000 mortgage at an annual interest rate of 2.5%.

Christopher and Kathy's only surviving parent is her father, Jason. He is 66 years old and, while he is dependent on Christopher and Kathy because of a physical infirmity requiring the use of a wheelchair, his condition is not severe enough for him to qualify for the disability tax credit. His 2022 net income is $9,400. This includes OAS payments and a small pension from a former employer.

In 2022, Christopher spent $12,000 modifying their new home to accommodate Jason's wheelchair. The work was enduring in nature and will allow Jason to be much more mobile within the home.

Christopher paid the following amounts in 2022:

Root Canal Fee for Christopher $1,525

Hair Replacement Fees for Christopher 4,300

Prescription Glasses and Contact Lenses for Kathy 1,342

Teeth Whitening Fees for Kathy 2,000

Psychologist Consulting Fees for Kathy 2,450

Electric Wheelchair for Jason 3,300

Physiotherapy Fees for Jason 3,420

Employment Information

Christopher works for a large Canadian public company. His salary is $67,460, none of which is commissions. His employer withholds the following amounts in 2022:

Registered Pension Plan (RPP) Contributions (Note 1) $4,200

EI Premiums 953

CPP Contributions 3,500

Contributions to Registered Charities 3,200

Note 1 - Christopher's employer makes a matching contribution of $4,200.

Christopher is required to travel fairly extensively by his employer and uses his own automobile for this purpose. His current non-zero-emission automobile was purchased on January 1, 2022 at a cost of $42,000. In 2022, the automobile was driven 32,000 kilometers, 25,600 of which were employment purposes and 6,400 for personal use. Operating expenses for the year totaled $4,900 none of which were reimbursed by his employer.

At the time he purchased the automobile, his employer provided him with an interest free loan of $20,000 to assist in the car purchase. None of this loan will be repaid until 2023. Assume that the relevant prescribed rate of interest on employee loans throughout 2022 was 1%.

In addition to his automobile expenses, his other 2022 travel expenses were:

Hotels $2,700

Food while travelling for the employer 1,800

His employer provides him with the following allowances for his travel:

Hotels and Food $4,800

Use of personal automobile ($100 per week) 5,200

Investment Information

Early in 2022, Christopher's father died of cancer and left him a very large inheritance which Christopher used to create a substantial investment portfolio. Christopher paid off his mortgage on September 25, 2022 with funds from the inheritance. On October 1, 2022, he used his house as collateral for a new $200,000 mortgage at the same 2.5% annual interest rate. He invested the mortgage funds in shares of Canadian public companies.

The 2022 results for his investments are:

Shares in Canadian Public Companies - During the year he receives $23,000 in eligible dividends.

Shares in Canadian Controlled Private Company (CCPC)- He has invested in a local company that has developed a revolutionary new product. As the product is becoming successful, the Company pays Christopher non-eligible dividends of $15,000 in 2022.

Foreign Preferred Shares - In 2022 he purchased US$25,000 in preferred shares of U.S. based public companies. At the time he purchased these shares, the exchange rate was US$1.00 = C$1.40. In 2022, these shares pay dividends throughout the year totaling US$1,800. Foreign income taxes of 10% were withheld. The average exchange rate for 2022 was US$1.00 = C$1.35.

Mutual Trust Fund - During the year, Christopher's owned mutual trust fund units that made distributions totaling $34,250. The breakdown of these distributions is as follows:

Capital Gains $20,000

Eligible Dividends 9,000

Interest Income 5,250

Total $34,250

Required: Ignore GST/HST & PST considerations in your solution, as well as the provisions of the U.S./Canada tax treaty.

A. Determine Christopher's 2022 net income

Determine Christopher's 2022 taxable income

Determine Christopher's 2022 federal income tax payable.