Question

Su-Ling is a sales representative for a Canadian controlled private corporation that manufactures office furniture. Her gross salary for the year ending December 31, 2020, is $53,000 and, in addition, she earned commissions of $34,500 [25% of the bonus was not received until January 5, 2021]. For the 2020 taxation year, her employer withheld the following amounts from her income:

Federal and Provincial Income Taxes   $22,400

Registered Pension Plan Contributions.   3,200

Contributions to Group Disability Plan. 212

EI Premiums   856

CPP Contributions 2,898

Su-Ling’s employer made a $3,200 matching contribution to her registered pension plan and a $236 matching contribution to her group disability insurance.

Other Information:

1. During 2020, Su-Ling is provided with an automobile that has been leased by her employer. The lease payments are $1,220 per month, an amount that includes a $127 per month payment for insurance. The car is used by her for 10 months of the year and, during the period of non-use, she is required to return the car to her employer’s premises. During 2020, she drives it a total of 67,000 kilometers. Of this total, 63,000 kilometers were for travel required in pursuing the business of her employer, and the remainder was for personal use. She reimbursed her employer $1,400 for her personal use of the automobile.

2. During 2020, Su-Ling was hospitalized for a month. The disability plan that provides periodic benefits to compensate for lost employment income paid her benefits of $2,650 during this period. She began making contributions to this plan in 2019 and paid $260 for that year.

3. On July 1, 2020, Su-Ling received a $50,000 loan from her employer. The loan requires annual interest payments at a rate of 1 percent, and she pays the interest for 2020 on January 18, 2021. Assume that at the time the loan was granted and for the remainder of the year, the prescribed rate was 2 percent. The loan is still outstanding at the end of the year.

4. Su-Ling was given options to buy 200 shares of her employer’s stock at a price of $32 per share three years ago. At the time the options were issued, the shares had a fair market value of $30 per share. On June 1, 2020, she exercises the options. At the time of exercise, the shares had a fair market value of $45 per share. She does not plan to sell the shares for at least two years.

5. During the year, Su-Ling traveled extensively on business. She had travel costs of $3,365 in air fares, $4,880 in hotels, and $2,450 in meals while on the road. She also spent $2,720 to entertain clients.

Calculate Su-Ling’s minimum net employment income for 2020. List which benefits she receive which would be non-taxable

Answer 1

53000 34500 22400 32001 Su-Ling Account Statement Su-Ling Gross Salary Su-Ling Commission Su-Ling Federal and provincial income taxes Su-Ling Registered Pension Plan Contributions Su-Ling Group Disability Plan Su-Ling El Premiums Su-Ling CPP Contributions Employer Pension Plan Contributions Employer group disability insurance Su-Ling She reimbursed her employer Su-Ling 2020 employment income paid her benefits Su-Ling She began making contributions to this plan in 2019 Su-Ling Loan Su-Ling Shares Su-Ling Su-Ling spent for travel 212 856 856 3,200 236 1400 2650 260 50000 200 Shares 2,720

Income Expenses 53000 34500 22400 3200 Net employment income for 2020 Decription Amount Gross Salary 53000 Commission 34500 Federal and provincial income taxes 22400 Registered Pension Plan Contributions 3200 Group Disability Plan 212 El Premiums 856 CPP Contributions 856 She reimbursed her employer 1400 2020 employment income paid her benefits 2650 Su-Ling spent for travel 2,720 Total 121794 212 856 8561 1400 2650 2,720 31644 90150 Net Income for 2020 58506