George Aptekman is 37 years old and is employed by a Canadian public company. His annual salary is $118,500, none of which is commissions. Because of his outstanding work during 2021, he has been awarded a $32,000 bonus. Half of this bonus was paid in December 2021, and the other half will be paid in April 2022.

For 2021, his employer withheld EI premiums of $875 and CPP contributions of $2,800 from his pay. The employer also withheld professional association dues of $2,300 and contributions to the United Way of $1,800.

Also withheld were registered pension plan contributions of $6,700. The employer also made a contribution to the plan of $4,500.

Georges spouse, Mary Aptekman, is 36 years old. Her Net Income For Tax Purposes is $8,430.

The Aptekmans have three children, who all live with them. Information on these children is as follows:

Donna is 22 years old and attends university on a full-time basis for 11 months of the year. George pays her tuition fees of $9,700, along with textbook costs of $900. She is in good health. She has net income of $15,800 all of which is from investments. The investments were purchased with income from part-time jobs during her high school years.

Stephanie is 19 years old and has a physical infirmity that prevents her from working on a full-time basis. She is infirm and has income from part time jobs of $7,430.

Michelle is 16 years old, in good health, and has income from part time jobs of $5,275.

Other Information:

1. During 2021, George spent $4,200 on employment related meals (non-travel) and entertainment with clients of his employer. His employer reimbursed all but $900 of these costs.

2. During 2021, George receives several gifts from his employer:

• As a reward for winning the company's Employee Of The Year Award, he receives an expense paid weekend at a local hotel. The regular price for this package was $850.
• As is the case for all of the company's employees, George received a $650 gift certificate for a local department store.
• At Christmas, the company provides each employee with a basket of gourmet food. The value of this basket is $300.

3. In 2018, George received options to purchase 300 shares of his employer's common stock at a price of $72 per share. At the time the options were granted, the market price of the stock was $70 per share. In January 2021, when the shares are trading at $85 per share, George exercises all of the options. He still owns these shares at December 31, 2021.
4. During 2021, both Donna and Michelle had surgery. George had to pay $3,200 for emergency services after Michelle's nose suffered serious trauma during a hip hop dance class. He also paid $14,300 for cosmetic surgery to reduce and reshape Donna's nose which she believes has greatly improved her appearance. These amounts are included in the following medical expenses of the family, all of which were paid by George:

George and Mary $ 2,100

Michelle 4,200

Stephanie 11,700

Donna 16,000

5. During 2021, George and Mary decide to purchase their first family home (they have rented for the last 25 years). After considerable searching, they identify the perfect property one block from their rented apartment and purchase it for $572,000. As is his employer's policy, he is granted an interest-free loan of $170,000 to assist with this purchase. The loan was granted on April 1, 2021. Assume that the prescribed rate is 2 percent throughout 2021.

REQUIRED

1. Calculate George Aptekmans minimum Taxable Income and federal Tax Payable (Refund) for the year ended December 31, 2021. Show all of your work whether or not you feel it is relevant to your final answer. [19 Marks]

2. (i) Explain why George Aptekman qualifies for each tax credit that was claimed in Part A. You can use point form. [14 Marks]

(ii) Explain the income tax treatment of the employee stock option in Part A. [3 Marks]