Mariah Holt, a management consultant, provided you with the following statement for the year ended December 31.
Fees received (gross) .................................. $145,000
Salaries and benefits expense............................ 55,500
Liability insurance expense ............................... 5,000
Office expense .............................................. 1,200
Office equipment ........................................... 1,000
Automobile expenses ....................................... 1,000
Interest expense (loan for business use)................ 10,500
Professional courses ....................................... 1,400
Beginning undepreciated capital cost............................
Automobile (Class 10.1)................................. 20,000
Office equipment (Class 8) .............................. 30,500
For the year, Mariah drove her automobile 30,000 kilometres, of which 15,000 kilometres were driven for business purposes. Mariah and her sister purchased a commercial rental property on December 5. The cost of the property was as follows:
(1) Land $950,000,
(2) Building $500,000, and
(3) Furnishings $3,000.
The rental income and expenses for the 26 days were as follows:
(1) Rent $24,000,
(2) Operating expenses $20,000, and
(3) Interest expense $6,250.
Mariah, a single parent of two children aged three and five, paid $800 per month to a babysitter to care for the two children in her home. In January, Mariah had purchased her first home for $115,000, paid $2,400 for commissions and $1,900 to move 45 kilometres closer to her consulting office. She withdrew $20,000 from her RRSP under the Home Buyers' Plan.
REQUIRED
(a) Calculate Mariah's net income for the taxation year.
(b) Identify any area of Mariah's income that may be controversial, particularly with the CRA.