Mr. Ron Sharpe is 42 years of age and lives in Calgary, Alberta. He is divorced and his two children Vera (age 9) and Zach (age 12) live with him. Neither of the children have income of their own. Zach has a physical illness, although it is not severe or prolonged enough to qualify for the disability credit.

During the year ending December 31, 2019, Mr. Sharpe worked for a large public company as an engineer and earned a gross salary of $96,000. His 2019 bonus of $10,000 was paid in two instalments, half in December 2019 and the other half not until April 2020. His employer withheld the following amounts from his salary:

Canada Pension Plan Contributions $2,749

Employment Insurance Premiums 860

Federal Income Tax 12,500

Registered Pension Plan Contributions 3,500

Donations To United Way 800

Union Dues 360

Other Information:

1. Mr. Sharpe is a member of his employers pension plan. His employer made a contribution on his behalf that was equal to the $3,500 contribution that was withheld from his salary.

2. Mr. Sharpes employer provides him with a car that is leased for $842 per month. Mr. Sharpe drives the car a total of 38,000 kilometers during the year, 26,000 kilometers of which were for employment related purposes. The car was available to Mr. Sharpe for the entire year, with the exception of the one month that he was away from the business on sick leave. During this one month period, he left the keys to the car with his employer, as required.

3. During 2019, Mr. Sharpe was granted options to buy 1,000 shares of his employers shares at $25 per share. At the time he was granted the options, the shares were trading at $20 per share. During July 2019, he exercised all of the shares when the shares were trading at $32 per share. Mr. Sharpe sold all of the shares in November 2019 when they were selling at $37 per share.

4. His divorce decree, which was issued in 2012, requires his former spouse to pay $3,000 per month in child support and an additional $1,000 per month in spousal support. All of the payments for previous years have been made by his former spouse and she paid both the required child and spousal support payments during 2019 as well..

5. Mr. Sharpes mother passed away early in the year and he received a $200,000 inheritance. He invested $100,000 and earned $2,500 in interest on the balance during 2019. He used the balance of $100,000 as a down payment on a home for himself and his children. He had never owned a home before.

6. Mr. Sharpe is required to travel to clients as part of his work. He spent $2,100 on this travel and his employer reimbursed him directly for all of these costs during 2019.

7. Mr. Sharpe pays $100 per month on parking at his head office. He wants your advice on whether he can deduct those costs on his tax return.

8. Mr. Sharpes professional engineering annual dues were $1,100 and he paid them in January 2019 for the 2019 calendar year. These were incurred by Mr. Sharpe personally but not required as part of his employment contract.

9. Mr. Sharpes employer provided him with a $20,000 interest free loan just to motivate him to work harder. Mr. Sharpe chose to put it towards a down payment on a cottage for his pleasure. This loan was granted on May 1, 2019 and must be repaid at the end of five years. No principal payments are made during the year. Assume that the prescribed rate for the entire period is 2%.

10. As a birthday gift, Mr. Sharpe received a $100 gift certificate to buy something for himself the Canadian Super Store. At Christmas, all of the employees of the company Mr. Sharpe works at received a gift basket containing gourmet food items. The retail value of this basket is $300 and he was thrilled as it was his first Christmas gift ever from his boss.

11. Fitness is very important to Mr. Sharpe and his employer paid $1,000 towards his health club

membership for the year. Mr. Sharpe only uses the membership personally and not to entertain clients.

12. Mr. Sharpe paid $200 to a professional accountant to help him with his income tax return preparation.

13. Child care costs amounted to $350 per week total for the two children and were paid for a total of 36 weeks during the school year while Mr. Sharpe was at work. In the summer, both children spent four weeks at an exclusive overnight summer camp. The fees at this camp were $1,000 per child per week. Mr. Sharpe had a neighbourhood teenager (aged 15) take care of the children for 3 weeks in the summer and he paid her $100 per week. The rest of the summer, Mr. Sharpe was on vacation himself.

14. Due to his illness during his sick leave, Mr. Sharpe has medical expenses for himself totalling $16,250 in 2019. Veras medical costs were $2,400 and Zachs were $6,000 during the year. Fortunately Mr. Sharpe has a family medical plan which covers 80 percent of all of his medical expenses for which he received reimbursement during 2019. The employer had paid all the premiums for this private medical insurance plan.

15. In addition to the $800 in United Way donations that were deducted by his employer, Mr. Sharpe makes contributions to other registered charities of $1,400.

16. Mr. Sharpe doesnt feel comfortable about his retirement nest egg and made a contribution to his Registered Retirement Savings Plan (RRSP) in the amount of $5,800 during 2019. In order to help him plan for this contribution, he had paid $700 to a financial counsellor.

17. Mr. Sharpe also just recently learned that he could catch up on his Tax Free Savings Account (TFSA) and contributed a total of $10,000 to that plan during 2019. He wants to have that money set aside to pull out for his childrens education in the future.

Required:

Calculate Mr. Sharpes 2019 minimum:

• Net Employment Income For Tax Purposes,
• Net Income for Tax Purposes,
• Taxable Income,
• Federal Tax Payable before consideration of any credits and/or income tax that would have been withheld or paid in instalments,
• Net Federal Tax Payable