Tom and Mary have come to you for some advice regarding their current tax situation, in addition to some changes they are proposing for the future. They are a married couple and have no children. Tom works for an engineering firm and earns an annual gross salary of $85,000. He has been promised a ten percent raise next year.He will also receive a $20,000 bonus for his exceptional contribution to the company in February of next year. Mary works for a law firm and earns an annual gross salary of $50,000.Her net pay cheque is $3,000 each month.Mary's employer contributes $40 a month towards Mary's health club membership, and $45 a month towards a group life insurance plan. Mary also received $1,200 in public corporation dividends during the year prior to selling her shares in SPQ Ltd. for $10,000.The brokerage fee for the sale was $200.Mary originally paid $7,000 for the shares four years ago. Mary also sold her shares in KXM Ltd. for $2,000.She originally paid $3,000 for the shares. Tom and Mary have been investing in their RRSPs for the last five years, and would like to do so again this year. Tom's last Notice of Assessment from the CRA showed RRSP contribution room of $4,000.Mary's Notice of assessment showed room of $8,000. Tom is going to use his available contribution room as his total contribution this year.Mary plans to contribute $2,000 to her RRSP and $2,000 to a TFSA. Tom has also been operating a small retail proprietorship (Windy Operations) which earned $145,000 in sales revenues during the year.The cost of goods sold was $80,000. Operating expenses were $20,000 which included a golf membership for employees valued at $8,000.Additionally, Tom reported $2,000 worth of amortization on the vehicle he used solely for the business. Windy Operation's net income from the financial statements was $43,000. The tax account from last year showed a year-end closing UCC balance for the Class 10 vehicle of $5,500. Tom is considering purchasing an old warehouse next year at a cost of $60,000 in order to expand his company.He predicts this will cause an increase in sales and costs of goods sold of twenty-five percent each. Tom estimates that each of his operating expenses will increase by fifteen percent, in addition to an increase in amortization costs from $2,000 to $8,000. Mary would like to resign from the law firm next year and start a small proprietorship.She estimates that the business will generate revenues of $20,000.Allowable expenses for tax purposes are estimated to be $25,600. Profits are not expected until the second year of operations. Mary is worried that the $5,600 loss will be "lost" for tax purposes since she won't have any other income during the year. Tax Information Non-eligible Dividend Gross-Up Factor1.15 Eligible Dividend Gross-Up Factor1.38 Class 1 CCA Depreciation Rate ( Warehouse )6 % Class 10 CCA Depreciation Rate30 % Rate of Tax for a CCPC**15 % Tom's Marginal Rate of Tax45 % CCPC = Canadian Controlled Private Corporation

Determine the net income for tax purposes for each of Tom and Mary for the current year, minimizing taxes whenever possible.