Question:
Maxwell Smart is the vice-president of KM Ltd., a Canadian-controlled private corporation located in Halifax, Nova Scotia. KM operates a real estate development business selling and constructing commercial buildings and residential apartments. Maxwell's 2013 financial transactions include the subsequent:
- Maxwell received a salary of $155,000 from KM. From this amount, KM deducted CPP and EI of $3,247 and income tax of $30,000. The company given him with a car that cost $40,000 and that has an undepreciated capital cost of $18,000. The operating costs of $3,000 were paid by KM. In 2013, Maxwell drove the car 20,000 km, of which 8,000 km was for employment purposes. KM contributed $4,000 on Maxwell's behalf to a deferred profit sharing plan. Although KM does not have a group life insurance plan, it paid Maxwell's personal life insurance premium of $1,000 (coverage - $75,000).
- In this year, Maxwell sold 1,000 shares of KM Ltd. for $20 per share. He had acquired the shares three years earlier for $9 per share as part of a company stock-option plan. At the time of purchase, the shares were valued at $11 per share.
- In 2012, Maxwell constructed a 10-suite apartment block. He sold the property in 2013 for $800,000, which was $150,000 more than the original land and building cost. He received $80,000 of the proceeds in cash, with the balance due in five annual installments beginning in 2014. The property incurred a net rental loss of $7,000 (before amortization).
- Maxwell sold his summer cottage for $90,000 after it was announced that a waste disposal site would be developed in the area. He had purchased the cottage six years earlier for $120,000.
- In 2010, Maxwell loaned $16,000 to Alloy Ltd., a Canadian-controlled private corporation. All of the company's assets are used in an active business. The 2012 interest of $1,400, which Maxwell included in income, has not been received. The company is in severe financial difficulty and may not survive beyond next year.
- Maxwell sold shares of a public corporation, purchased in 2011 for $12,000, for $20,000.
- In November, Maxwell received a legal bill for $1,200 relating to a disagreement over a tax reassessment. Maxwell paid $1,200 in December 2013.
- Maxwell received Eligible dividends of $4,000 and Non-eligible dividends of $3,000 from Canadian corporations and $3,600 from a overseas corporation. The foreign corporation remitted a 10% withholding tax to its government.
- Maxwell celebrated his 65th birthday in December 2013. He supports his wife, who is retired. She had investment income of $8,000 in 2013. During the year, Maxwell made gifts of $3,000 to a local charity. He paid tuition fees of $900 to attend a three-month evening course at a university.
- Maxwell has at the end of 2012, had unused non-capital losses of $7,000.
Required:
Evaluate Maxwell's minimum 2013 net income for tax purposes, federal income tax and taxable income.