Ms. Tanja Umstead is 46 years old and lives in Richmond, British Columbia. She is in good health and works in the sales department of a large publicly traded company.

Tanja's Personal Information

1.She is divorced from her husband and has custody of her 11 year old daughter, Cynthia. The daughter is sufficiently disabled that she qualifies for the disability tax credit. The daughter has 2020 Net Income for Tax Purposes of $6,425, made up of interest on bonds purchased from an inheritance.

2.Tanja's 68 year old mother lives with her and provides care for Cynthia on a full time basis. She is active and healthy. As she receives no compensation for this work, Tanja has no child care costs during 2020. The mother's 2020 Net Income for Tax Purposes is $13,460.

3.Because of a 2020 decrease in Cynthia's mobility, Tanja has had to install access ramps in several locations in her home. The cost of these ramps was $14,600.

4.During 2020, Tanja worked nearly 300 hours as a volunteer search and rescue volunteer. She received $200 in compensation for this work.[1]

5.Tanja's 2020 medical expenses are as follows:

Various prescription drugs for Tanja and Cynthia$3,465

Various medical specialist treatments for Cynthia10,490

Prescription sunglasses for Tanja and Cynthia875

Liposuction for Tanja (cosmetic, not for medical reasons)2,463

Dentist fees for Tanja's mother3,300

Dentures for Tanja's mother[2]1,325

6.During 2020, Tanja contributes $3,500 to registered charities.

Employment Information

1.Tanja's salary compensation for 2020 is $93,500. In addition, she was awarded a year end bonus of $12,000, all of which is payable in January 2021.

2.Tanja's employer sponsors a Registered Pension Plan (RPP), and during 2020, Tanja and her employer each contributed $4,150 to the plan. In addition, her employer withheld maximum EI premiums of $856 and maximum CPP contributions of $2,898.

3.Tanja's employer offers to pay the tuition for employees taking foreign language courses. Tanja is taking an intensive course in spoken Chinese at a British Columbia university. The tuition fee for the course is $3,600, all of which is paid for by her employer. The tuition payment is to be included in her employment income as a taxable benefit.[3] The duration of the course is eight months, and Tanja must purchase her own textbooks for $150.

4.Tanja is provided with disability insurance by an employer sponsored plan. During 2020, as a consequence of an automobile accident, she was unable to go to work for one month and received benefits of $6,500. Starting in 2018, Tanja has been contributing $340 per year for the pan's coverage. Her employer makes a matching contribution each year.

5.Tanja's employer provides her with an automobile that was purchased several years ago at a cost of $39,500. During 2020, the car is driven 41,000 kilometres, 34,000 of which were for employment-related travel. Tanja is required to pay her own operating costs, which for 2020 totaled $7,240.[4] Except for the one month that she was off from work, the car was available to Tanja throughout the year. During the one month that she was off, the car was left in her employer's garage.

6.Tanja's employer provides all of its employees with financial counseling services. The cost to the company of the services provided to Tanja was $450.

7.As a result of winning a sales contest, Tanja received a one week trip to Las Vegas. The value of this trip in Canadian dollars was $5,620.

8.Several years ago, Tanja received options to acquire 250 shares of her employer's common stock at a price of $25 per share. When the options were granted, the shares were trading at $25 per share. During 2020, Tanja exercises all of these options. On the exercise date, the shares are trading at $32 per share. Tanja still owns the shares at the end of 2020.

Required:

Calculate, for the 2020 taxation year, Tanja's minimum Taxable Income and federal tax payable, after tax credits.

[1] If Cynthia wishes to claim the tax credit for her volunteer search and rescue work, she must also claim the compensation as employment income.

[2] Medical expenses for a family member over age 18 who lives with the taxpayer (Tanja) may be claimed by Tanja, but these expenses must be reduced by the lesser of 3% of her mother's income, or $2,397, whichever is less.

[3] Because the tuition must be claimed by Tanja as income, she can also claim a tax credit for the tuition amount paid.

[4] If an employee is required to pay actual operating costs for a company vehicle, the portion of these costs related to business use (business kms./total kms.) can be deducted from the total automobile benefit otherwise calculated.