Question 1 (35 Marks):

John is employed in the manufacturing industry by Alpha Inc., a Canadian Public corporation. He has

requested your assistance in preparing his 2022 income tax return. Information regarding John's financial

activities for 2022 is outlined below.

Required

a. Calculate John's minimum net income for tax purposes and his minimum taxable income for

the 2022 taxation year.

b. Based on your answer to part (a), calculate John's minimum federal income tax for the 2022

taxation year (Hint: you need to take all the credits available). Show all calculations.

1. John received a gross salary of $70,000. From this amount, Alpha Inc. deducted income tax of

$20,000, CPP $3,039 and EI $953. Alpha Inc. also contributed $2,500 to the registered pension plan on

Johns behalf, and he made a matching contribution of $2,500.

2. Jamal had one house in the city and one cottage for summer time. On November 1, he sold both

properties.

Residence Date of purchase Selling price Cost

House 2015 150,000 110,000

Cottage 2020 80,000 50,000

3. John received a dividend from a foreign corporation of $1,700 (net of 15% withholding tax). A dividend

of $500 was received from Royal Bank of Canada stock.

4. In June 2012, John paid $2,000 for cosmetic surgery, which was not considered necessary by his doctor.

5. John purchased a parcel of land in 2010 for $40,000. On November 30, 2022, he sold the land for

$110,000. He also paid $10,000 in expenses on disposition. He only received $20,000 cash, and the

remaining $90,000 was due in three equal instalments in the next three years.

6. John received $300,000 as the only beneficiary of his father's life insurance policy.

7. John purchased 1,000 shares of Beta Public Company in 2020 for $4 per share. On July 1, 2022 he

received 200 additional shares as a stock dividend. The Beta shares were trading at $10 at that time. In

the last week of December 2022, Mike sold these 200 shares at $12 per share.

8. In 2022, John sold a coin for $1,600. He acquired this coin in 2018 as a bequest from his fathers

estate. His father had paid $200 for the coin and at the time of his death it was valued at $900.

9. John had the following other receipts and disbursements in 2022:

Bonus received from the previous employer 7500

Legal Fee paid for the recovery of bonus (above item) 1,000

Contribution to TFSA 4,000

Donation to a Federal Political Party 600

Donation to a Registered Charity 500

CPP Deduction 461

RRSP contribution 10,000

10. John is separated and lives with his son, who is 16. In 2022, the son had a $3,000 net income from a

part-time job for tax purposes. Johns RRSP contribution room, from his 2021 tax return, is $9,000.