Ms. Mindy Vincent is employed by a large publicly traded corporation and her 2021 salary is $126,400. In addition to her annual salary, she received a performance bonus of $24,700, one-half of which was paid in 2021, with the remaining one-half not due until July 1, 2022. In addition to her salary, she earns commissions of $31,800 during 2021. She has an employment contract with the employer that requires her to pay for her own travel and other expenses subject to limited reimbursement.
During 2021, Ms. Vincent’s employer withheld the following amounts from her compensation.
|
EI Premiums |
$890 |
|---|---|
|
CPP Contributions |
3,166 |
|
RPP Contributions |
7,800 |
|
Life Insurance Premiums (Employer Makes A Matching Contribution) |
520 |
Ms. Vincent is divorced and has custody of her two children. They are aged 12 and 17. The 12-year-old son has 2021 net income of $2,100.
The 17-year-old daughter is in full time attendance at a university during eight months of the year. Ms. Vincent pays her annual tuition of $6,600. The daughter has net income of $4,200 and has agreed to transfer the maximum tuition credits to her mother. Also living with Ms. Vincent is her 68-year-old father whose Net Income for 2021 is $8,200. He has supplemented his income for years with his casino winnings and they total $10,100 in 2021.While he does not qualify for the disability tax credit, he has a physical infirmity that makes him dependent on Mindy.
|
1. |
Ms. Vincent is provided with an automobile by her employer. By 2021, it is driven 48,200 kilometers, of which 42,800 are for employment purposes and 5,400 for personal use. The automobile is leased by the employer at a monthly rate of $728, including GST of $30 and PST of $48.The monthly rate also includes a payment for insurance of $50 per month. The automobile was used by Ms. Vincent for 11 months in 2021. She was required to return the automobile to her employer’s garage during the month that she did not use it. |
|---|
2) Ms. Vincent incurred the following employment-related expenses during 2021.
|
Advertising |
$5,700 |
|---|---|
|
Entertainment |
9,400 |
|
Meals |
2,300 |
|
Hotels |
8,300 |
|
Airline Tickets |
3,200 |
|
Total Expenses |
$28,900 |
Ms. Vincent’s employer reimburses all of her meal costs and one-half of her hotel bills. No other expenses were reimbursed.
3) During 2020, Ms. Vincent was granted options to acquire 5,000 shares of her employer’s common shares at an option price of $27 per share. This was also the market value of the shares at this time. During July 2021, Ms. Vincent exercises all of the options at a point in time when the shares were trading at $28 per share. She is still holding the shares at the end of the year.
4) During 2021, Ms. Vincent gives total cash of $1,800 to a variety of registered charities.
5) Also, during 2021, Ms. Vincent donates $300 to each of the three federal political parties.
6) During 2021, Ms. Vincent pays for the following eligible medical costs.
|
For Herself |
$870 |
|---|---|
|
For Her Two Children |
1,510 |
|
For Her Father |
3,930 |
|
Total Medical Costs |
$6,310 |
Questions
1) Determine Ms. Vincent’s minimum Net Income for Tax Purposes for 2021.
2) Determine Ms. Vincent’s minimum Taxable Income for 2021.
3) Based on your answer in Requirement B, determine Ms. Vincent’s federal income Tax Payable or refund for 2021. Indicate any carryforwards available to her and her dependents and the carry-forward provisions. Ignore any amounts that might have been withheld by her employer or paid in installments.
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