Review Ms. Mist is employed as an internal auditor by Universal Imports Limited (UIL), a Canadian-controlled private corporation. To drive to UIL’s locations, as required in her employment, UIL provides her with a car and withholds an amount for her salary to cover personal kilometers. During 2019, Ms. Mist used the car for 21,000 employment kilometers and 9,000 personal kilometers. When on an auditing assignment, she is out of town at least five days. Ms. Mist provides you with the following information related to 2019: Gross salary $ 140,000 Withheld from salary Income tax $ 42,000 Registered Pension Plan 8,500 Canada Pension Plan 2,594 Employment Insurance 858 Group term life insurance 750 Payment for personal use of company car 2,000 57,702 Net salary $ 83,298 Travel allowance paid by employer 8,100 $ 135 per day for 60 days Actual reasonable travelling expenses for 2019 were: $ 2,400 for meals $ 4,400 for accommodation $ 3,865 for air and ground transportation Book value of company-owned automobile 31,280 Original capital cost in November 2018 Operating costs paid by employer in 2019 32,000 9,575 Employer contributions Group term life insurance policy Premium 450 Extended medical insurance premium 900 Registered Pension Plan 8,400 Premium paid by Ms. Mist for private dental insurance 500 Expenses paid by UIL for Mr. Mist to accompany her on an auditing trip to Banff. During the trip Ms. Mist broke her leg and personally incurred $3,000 in medical expenses. 3,000 Luggage set received as a birthday gift 300 Airport premium lounge passes received in recognition of five-year service, it was the first long term service award received by Ms. Mist 400 Bonus payable on December 31, 2019, that was paid to Ms. Mist in January 2020 5,000 Fees paid by Ms. Mist to the Institute of Internal Auditors, a professional body recognized by legal statute 450 Fees paid by UIL for a Wantlen University Spanish course. 950 Fees paid by Ms. Mist paid to Super Fit Athletic Club 900 Donation made to BC Search and Rescue, a registered charity 500 Interest received on total return bond portfolio 200 Dividends received on UIL stock 750 Proceeds received from sale of 1,000 shares of UIL stock acquired under the employee stock option plan The options were granted in 2015 with an exercise price of $10 when the market value of the shares was $12 per share. Ms. Mist exercised the options in 2015 when the fair market value was $13 per share. 15,000 Gain on sale of shares held in her non-registered portfolio 5,000 Loss on sale of shares in her TFSA portfolio (7,500) Carryover of a net capital loss on shares sold in 2014 (3,500) Ms. Mist received a $100,000 low interest home purchase loan in 2018. The balance is due in 2021. Interest paid in 2019 was $100. 100 Ms. Mist’s husband received a severance package in 2018 and used 2019 to renovate their house. His taxable income in 2019 was $5,000. Their 20-year-old son dependant lives with them. In 2019 they paid $8,000 in tuition at a recognized Canadian University and also his $4,000 medical bill following a mountain biking accident. Their son’s income in 2019 was $10,000. Ms. Mist receives annual spousal support of $12,000 from a prior marriage. Required: (A) Determine the federal tax payable for Ms. Mist in 2019. Clearly identify sources of income, net income for tax purposes, taxable income and federal tax in your calculation. Present all aspects of the required calculations. (B) Explain any tests applied in the determination of the appropriate tax treatment. (C) Explain any amounts excluded from your calculation of tax payable.  

Review Ms. Mist is employed as an internal auditor by Universal Imports Limited (UIL), a Canadian-controlled private corporation.  To drive to UIL’s locations, as required in her employment, UIL provides her with a car and withholds an amount for her salary to cover personal kilometers.  During 2019, Ms. Mist used the car for 21,000 employment kilometers and 9,000 personal kilometers.  When on an auditing assignment, she is out of town at least five days. Ms. Mist provides you with the following information related to 2019: 

Gross salary
$ 140,000

Withheld from salary

 
Income tax
$ 42,000
 

 
Registered Pension Plan
8,500
 

 
Canada Pension Plan
2,594
 

 
Employment Insurance
858
 

 
Group term life insurance
750
 

 
Payment for personal use of company car
   2,000
    57,702

Net salary
 $ 83,298

 
 

Travel allowance paid by employer
  8,100

 
$ 135 per day for 60 days Actual reasonable travelling expenses for 2019 were:$ 2,400 for meals$ 4,400 for accommodation$ 3,865 for air and ground transportation
 

Book value of company-owned automobile
31,280
 

 
Original capital cost in November 2018Operating costs paid by employer in 2019
32,0009,575
 

Employer contributions

 
Group term life insurance policy Premium
450
 

 
Extended medical insurance premium
900
 

 
Registered Pension Plan
8,400
 

Premium paid by Ms. Mist for private dental insurance
500

Expenses paid by UIL for Mr. Mist to accompany her on an auditing trip to Banff.  During the trip Ms. Mist broke her leg and personally incurred $3,000 in medical expenses.
3,000

Luggage set received as a birthday gift
300

Airport premium lounge passes received in recognition of five-year service, it was the first long term service award received by Ms. Mist
400

Bonus payable on December 31, 2019, that was paid to Ms. Mist in January 2020
5,000

Fees paid by Ms. Mist to the Institute of Internal Auditors, a professional body recognized by legal statute
450

Fees paid by UIL for a Wantlen University Spanish course.
950

Fees paid by Ms. Mist paid to Super Fit Athletic Club
900

Donation made to BC Search and Rescue, a registered charity
500

Interest received on total return bond portfolio
200

Dividends received on UIL stock
750

Proceeds received from sale of 1,000 shares of UIL stock acquired under the employee stock option planThe options were granted in 2015 with an exercise price of $10 when the market value of the shares was $12 per share.Ms. Mist exercised the options in 2015 when the fair market value was $13 per share.
15,000

Gain on sale of shares held in her non-registered portfolio
5,000

Loss on sale of shares in her TFSA portfolio
(7,500)

Carryover of a net capital loss on shares sold in 2014
(3,500)

Ms. Mist received a $100,000 low interest home purchase loan in 2018.The balance is due in 2021.  Interest paid in 2019 was $100.
100

 Ms. Mist’s husband received a severance package in 2018 and used 2019 to renovate their house.  His taxable income in 2019 was $5,000.  Their 20-year-old son dependant lives with them.  In 2019 they paid $8,000 in tuition at a recognized Canadian University and also his $4,000 medical bill following a mountain biking accident.  Their son’s income in 2019 was $10,000.  Ms. Mist receives annual spousal support of $12,000 from a prior marriage.  Required: 

Determine the federal tax payable for Ms. Mist in 2019. Clearly identify sources of income, net income for tax purposes, taxable income and federal tax in your calculation.  Present all aspects of the required calculations.

 

Explain any tests applied in the determination of the appropriate tax treatment.

 

Explain any amounts excluded from your calculation of tax payable.

   
 
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