Mr. Parker is a financial analyst employed by a Canadian public company located in Edmonton. During 2019, his gross salary totaled $81,000. In addition, he was awarded a $5,000 bonus to be paid on January 25, 2020.

During 2019, Mr.Parker had the following amounts withheld from his gross wages:

Federal Income Tax $6,700

Employment Insurance Premiums 750

Canada Pension Plan Contributions 2,395

Registered Pension Plan Contributions 2,250

Donations to a Registered Charity 650

Other Information:

1. Due to a train accident while travelling for business, Mr. Parker was seriously injured and was in a hospital for two full months during 2019. His employer provides complete group disability insurance coverage, so he received a total of $4,800 in payments during this period. All of the premiums for this insurance plan are paid by the employer.

2. On February 21, 2018, Mr. Parker received options to buy 300 shares of his employers common stock at a price of $22 per share. At this time, the shares were trading at $21 per share. Mr. Parker exercised these options on July 6, 2019, when the shares were trading at $30 per share. He does not plan to sell the shares for at least a year.

3. To help Mr. Parker acquire a new home in Edmonton, his employer gave him a five year, interest free loan of $145,000. The loan was granted on July 1, 2019 when the interest rate on variable five year mortgages was 5 percent. The prescribed rate was 1 percent on this date and remained unchanged during the year. Mr. Parker purchased a house for $665,000 on July 2, 2019. He has never previously owned a home.

4. Other disbursements made by Mr. Parker include the following:

Financial accounting course tuition fees $1,275

Fashion history course tuition fees

(University of Alberta four week intensive course) 950

Fees paid to financial planner 230

Payment of premiums on life insurance 825

Mr. Parkers employer reimbursed him for the tuition fees for the accounting course, but not the fashion course. The reimbursement was not included on his T4.

5. Mr. Parker is a single parent. His wife was killed in a car accident 3 years ago that injured his 8 year old son, James. James qualifies for the disability tax credit and has no Net Income for the year.

6. Mr. Parkers mother, Lisa, lives with him and cares for James. Lisa is 67 years old and her Net Income For Tax Purposes is $9,700. Lisa refused to take any payments for caring for James.

7. Mr. Parker paid the following eligible medical costs during the year:

For Himself $ 7,200

For James 3,550

Total $10,750

REQUIRED

1. Calculate Mr Parkers minimum Taxable Income and federal Tax Payable (Refund) for the year ended December 31, 2019. Show all of your work whether or not you feel it is relevant to your final answer.

2. Explain, in words, the reason for the inclusion (or exclusion) of each item in your calculation of Mr. Parkers taxable income and tax payable (or refund) in Part A. You can use point form.