Reference no: EM132866889

Question - Martin Dorne is 53 years old and employed in construction work by a large public company. His annual salary is $98,500, none of which involves commissions. As the company was very successful during 2020, Martin has been provided with a $15,000 bonus. This bonus will be paid in equal amounts ($3,000) over the period 2020 through 2024.

Martin's employer withheld maximum EI premiums and CPP contributions, along with $18,000 in federal income taxes. Other amounts withheld by his employer are as follows:

RPP Contributions $4,300

Union Dues 450

Martin's common-law partner is Brian Lassiter. Brian is 48 years old and is legally blind. Brian has 2020 income from investments of $9,400.

Martin and Brian adopted three orphaned brothers from a war torn country 8 years ago. Information on these brothers is as follows:

David is 15 years old, in good health, and has income from part time jobs of $10,500.

Devon is 20 years old and has serious breathing problems that prevent him from working on a full time basis. He lives with Martin and Brian and has income from part time jobs of $5,150.

Derek is 22 years old and attends university on a full time basis for 8 months of the year. Martin pays his tuition fees of $14,300, along with textbook costs of $1,200. He lives with Martin and Brian and is in good health. He has self-employed income of $13,500. Assume he pays no CPP contributions on this income.

Other Information:

1. During 2020, Martin spent $12,300 on employment related meals and entertainment with clients of his employer. His employer reimbursed $7,300 of these costs.

2. During 2020, Martin makes his regular annual contribution of $2,000 to a registered charity, The Shepherds Of No Hope. (Martin is a very pessimistic individual.)

3. The family's 2020 medical expenses, all of which were paid by Martin, were as follows:

Martin and Brian $ 2,200

David 1,700

Devon 10,600

Derek 4,500

4. As interest rates continue to be very favourable, Martin and Brian purchase a residence near the rented residence that they have lived in for the last 15 years. The cost of the new residence is $480,000 and, to assist with the purchase, Martin's employer provides a $280,000 interest free loan. The loan was granted on July 1, 2020 and will have to be repaid on July 1, 2025. Assume the prescribed rate is 1 percent throughout the year 2020.

5. Martin is provided with an automobile by his employer. The automobile was purchased at a cost of $45,200, including HST at 13 percent. During 2020, the automobile is driven 48,000 kilometers, of which 37,000 were employment related. The automobile was used by Martin for 11 months during 2020. He was required to return the automobile to his employer's garage during the month that he did not use it.

6. During 2020, Martin receives several gifts from his employer:

As is the case for all of the company's employees,Martin receives a $250 gift certificate that can be used for merchandise at a local department store.

In recognition of his 10 years of service, Martin receives an engraved wrist watch. The retail value of this watch is $800.

At Christmas, all of the company's employees receive a gift box of vintage wines. The retail value of these wines is $400.

Required -

A. Determine Martin's minimum Net Income For Tax Purposes for the 2020 taxation year.

B. Determine Martin's minimum Taxable Income for the 2020 taxation year.

C. Based on your answer in Part B, determine Martin's federal Tax Payable and amount owing (refund) for the 2020 taxation year.