Mr. Sali is 42 years of age and lives in Calgary, Alberta, a province that does not have a provincial sales tax. He has never been married and has no dependents.

During the year ending December 31, 2016, Mr. Ron Sali earned a gross salary of $76,000. In addition, he has commission income of $2,800. His employer withheld the following amounts from his salary:

 

Required: Ignore GST considerations.

A. Calculate Mr. Sali’s maximum deductible RRSP contribution for 2016.

B. Assume that Mr. Sali contributes the amount calculated in Part A to his RRSP. Calculate Mr. Sali’s 2016 minimum:

• Net Income For Tax Purposes,
• Taxable Income, and federal Tax Payable before consideration of any income tax that would have been withheld or paid in instalments.

Canada Pension Plan Contributions $2,544 Employment Insurance Premiums 955 Registered Pension Plan Contributions 3,500 Parking Fees - Company Garage 480 Donations To United Way 800 Union Dues 360 Other Information: 1. Mr. Sali is a member of his employer's money purchase RPP. His employer made a contribution on his behalf that was equal to the $3,500 contribution that was withheld from his salary. Mr. Sali's employer provides him with a car that is leased for $642 per month. Mr. Sali drives the car a total of 38,000 kilometers during the year, 24.000 kilometers of which were for employment related purposes. The car was used by Mr. Sali 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 was required to retum the car to the company garage. 3. Mr. Sali is required to maintain an office in his home without reimbursement from his employer. His employer provides the required T2200 form. Based on the portion of the house used for this office, the related costs are as follows: Utilities And Maintenance $ 600 Insurance 900 Property Taxes 1,200 Mortgage Interest 1,800 4. Mr. Sali's employer reimburses him for all airline tickets and meals and a portion of his lodging costs. Mr. Sali is required by his employer to pay the remainder of his employment related travel costs. During 2016, this remainder amounted to $3,700. 5. Mr. Sali has accumulated a large number of Aeroplan frequent flyer miles as a result of travel that he has done for his employer. During 2016, he uses these miles to acquire two airline tickets. The first is a round trip to Miami which he uses for a short vacation. The economy fare to Miami is $625. The second ticket is a round trip to Edmonton to deal with one of his employer's clients. The economy fare to Edmonton is $575. 6. During 2016, in addition to his employment income, Mr. Sali had taxable capital gains from stock market trading of $6,200, a net rental loss of $3,900, and a self-employed business loss of $2,600. He also received eligible dividends of $2,500. 7. Due to his illness during his sick leave, Mr. Sali has medical expenses totalling $16,250 in 2016. His medical plan covers 80 percent of all of his medical expenses and he receives the reimbursement during 2016. 8. In addition to the $800 in United Way donations that were deducted by his employer, Mr. Sali makes contributions to other registered charities of $1,400. He is not eligible for the first-time donor's super credit. 9. In 2015, his Net Income For Tax Purposes was $71,000. This was made up of net employment income of $77,000 (after the deduction of $3,200 in RPP contributions), grossed up dividend income of $8,000, a net rental loss of S9,000, and a net business loss ofS5,000. 10. At the end of 2015, Mr. Sali's Unused RRSP Deduction Room was S3,400 and he had no undeducted RRSP contributions. His employer reported that he had a 2015 Pension Adjustment of $6,400.