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:
Withheld from salary
Registered Pension Plan
Canada Pension Plan
Group term life insurance
Payment for personal use of company car
Travel allowance paid by employer
$ 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
Original capital cost in November 2018Operating costs paid by employer in 2019
Group term life insurance policy Premium
Extended medical insurance premium
Registered Pension Plan
Premium paid by Ms. Mist for private dental insurance
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.
Luggage set received as a birthday gift
Airport premium lounge passes received in recognition of five-year service, it was the first long term service award received by Ms. Mist
Bonus payable on December 31, 2019, that was paid to Ms. Mist in January 2020
Fees paid by Ms. Mist to the Institute of Internal Auditors, a professional body recognized by legal statute
Fees paid by UIL for a Wantlen University Spanish course.
Fees paid by Ms. Mist paid to Super Fit Athletic Club
Donation made to BC Search and Rescue, a registered charity
Interest received on total return bond portfolio
Dividends received on UIL stock
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.
Gain on sale of shares held in her non-registered portfolio
Loss on sale of shares in her TFSA portfolio
Carryover of a net capital loss on shares sold in 2014
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.
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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