In Canada Ashley and Kris have come to ask you some questions regarding their tax returns. The couple lives in a common-law relationship. Kris is a chef at Mountain Hotel and Ashley is an electrician.

Kriss remuneration (salary) for the tax year was $92,000. The following information is available from Kriss T4 slip:

Deductions from pay:

CPP and EI 4,453

Registered Pension Plan Contribution 2,000

Income tax deducted 25,000

Mountain contributes an equal portion to Kriss RPP. Kris is also provided with a company car for use during the entire year. The car is leased by Mountain. Lease payments are $550 per month. Mountain pays $400 per month for the operating costs of the vehicle. Kris drove the car a total of 22,000 kilometres during the year. 9,000 of these were for personal travel. Kris also earned $3,000 from Mountains dining room tip pool. Mountain did not report the tips on Kriss T4. CPP enhanced contribution is $461.

Kris withdrew $10,000 from an RRSP during the year for use other than education or home ownership. Both Kris and Ashley contribute to their TFSAs each year. They each have a balance of $8,000 in their TFSAs, bearing 3% annual interest.

Ashley earns $65,000 and is waiting for the T4 from the electrical company to arrive in the mail, so will address some other issues now which might affect the years taxes.

1) Ashley sold a small piece of land during the year (which is capital in nature) for $68,000. The land originally cost $50,000. Selling costs were $800. Proceeds of $35,000 were received immediately and the remainder of the funds will be received next year.

Required:

A. Calculate Kriss minimum net income for tax purposes, and taxable income for the year. Show your work using the statutory formula from Section 3 of the Income Tax Act.

B. Calculate Kriss federal tax liability.

C. Calculate the tax consequences from Ashleys two issues. (Use tax rules applicable to 2022. Work must be shown for marks to be awarded.)