George Pharmacy is a pharmaceutical sales rep who has been very successful at his job in the last few years. Unfortunately, his family life has not been very happy. Three years ago, his only child, Anna, was driving a car that was hit by a drunk driver. She and her husband were killed and their 14 year old son, Kevin, was blinded in the accident. He also suffered extensive injuries to his jaw that have required major and prolonged dental work.

George and his wife, Valerie, adopted Kevin. Valerie quit her part time job to care for him. She also cares for her mother, Joan Drugstore, who lives with them. Joan suffers from dementia, Parkinsons, and severe depression. The family doctor has signed a letter stating that she is dependent on George and Valerie because of her impairments. Joan does not meet the resi- dency requirements necessary to qualify for Canadian Old Age Security payments.

Valeries parents separated two years ago in Scotland after her father, David Drugstore, suffered enormous losses in the stock market. They were forced to sell their home and David moved to Chile. David phones periodically to request that money be deposited in his online bank account.

Georges brother, Martin, completed an alcohol rehabilitation program after being fired for drink- ing on the job. He is also living with George and Valerie while he is enrolled as a full-time student at Western University. George is paying his tuition and Martin has agreed to transfer any available education related amounts to George. Although Martin plans to file his 2020 tax return, he has not done so yet.

Kevin is taking several undergraduate psychology courses at Western University. After hear- ing a talk given by an expert blind echolocator (i.e., a person who uses sound to locate objects), his goal is to become a researcher at the Brain and Mind Institute and study the use of echolocation.

Other information concerning George for 2020 is given on the following pages.

Required: With the objective of minimizing Georges Tax Payable, prepare the 2019 income tax return of George Pharmacy using the ProFile tax software program assuming Valerie does not file a tax return.

List any assumptions you have made and any notes and tax planning issues you feel should be placed in the file. Ignore HST implications in your solution by assuming that George does not qualify for the GST/HST rebate.

Personal Information

Title Mr. First Name George Last Name Pharmacy SIN 527-000-509 Date of birth (Y/M/D) 1956-07-02 Marital Status Married Canadian citizen? Yes Provide information to Elections Canada? Yes Own foreign property of more than $100,000 Canadian? No

Taxpayers Address

123 ZZZ Street, London, Ontario N0Z 0Z0 Phone number (519) 111-1111

Family Members

First Name Valerie (Spouse) Last Name Pharmacy SIN 527-000-483 Date of birth (Y/M/D) 1955 12/30

Net income 6520 in CPP

First Name Kevin (Child) Last Name Pharmacy SIN 527-000-517 Date of birth (Y/M/D) 2004 10/17

Net income Nil

First Name Joan (Mother in Low) Last Name Drugstore SIN None Date of birth (Y/M/D)1935 02/24

Net income $500

First Name David (Father in Low) Last Name Drugstore SIN None Date of birth (Y/M/D)1936 01/12

Net income Nil

First Name Martin (Brother) Last Name Pharmacy SIN 527-000-533 Date of birth (Y/M/D)1973 06/02

Net income $8300

During September, David was arrested in Chile. Valerie had to spend three weeks in Chile and pay $2,000 in bribes before she could get him released from jail. George had to pay Nannies On Call $3,500 for in-home help to take care of Kevin while she was gone.

During 2020, Mega reimbursed George $3,788 for meals and entertainment with clients, $2,268 for hotels, and $4,925 for airline tickets.

In addition to Georges salary, he also earns commissions. His employer requires him to have an office in his home and has signed the form T2200 each year to this effect.

On October 1, 2020, George purchased a new computer and software that will be used solely in his home office for employment-related uses. The computer cost $3,600 and the various soft- ware programs cost $1,250.

Replace 2019 with 2020

T2202A (Martin) Box Amount A 8,000 Tuition fees - for Martin Pharmacy (brother) Number of months in school - part time Number of months in school - full time B 0 C 8 T2202A (Kevin) Box Amount A Tuition fees - for Kevin Number of months in school - part time Number of months in school - full time 3,600 8 B C 0 Donor Charitable Donation Receipts Am't Valerie George Mothers Against Drunk Drivers (MADD) Canadian Institute For The Blind (CNIB) 1,000 3,000 T4 Box Amount 14 16 Issuer - Mega Pharma Inc. Employment income Employee's CPP contributions Employee's El premiums Income tax deducted Employment commissions Charitable donations 18 22 378,000.00 2,748.90 860.22 114,000.00 82,000.00 400.00 42 46 House Costs Area of home used for home office (square feet) Total area of home (square feet) Telephone line including high speed internet connection Hydro Insurance - House Maintenance and repairs Mortgage interest Mortgage life insurance premiums Property taxes 650 5,000 620 3,200 4,000 3,800 6,200 400 6,700 (Y/M/D) Patient Medical Expenses Description Am't 2019-12-31 2019-08-31 2019-09-19 2019-11-07 George George George Valerie Joan David Martin Kevin Johnson Inc. Dr. Smith Optician Pharmacy Dr. Wong Tropical Disease Centre Dr. Walker Dr. Takarabe Out of Canada insurance Dental fees Prescription glasses Prescription Psychiatric counseling Prescription Group therapy Orthodontics and Dental 731.00 155.40 109.00 66.84 2,050.00 390.00 6,000.00 30,000.00 2019-06-07 2019-03-22 2019-12-20 2019-10-01 George paid $800 for the care and feeding of Kevin's seeing eye dog, Isis, during 2019. George's 2019 RRSP deduction limit is $285,550