Question
Assignment Problem Three - 14 (Employment Income) For the past five years, Mr. Brooks has been employed as a financial analyst by a large Canadian
Assignment Problem Three - 14 (Employment Income)
For the past five years, Mr. Brooks has been employed as a financial analyst by a large Canadian
public firm located in Winnipeg. During 2020, his basic gross salary amounts to $63,000. In addition, he was awarded an $11,000 bonus based on the performance of his division. Of the total bonus, $6,500 was paid in 2020 and the remainder is to be paid on January 15, 2020.
During 2020, Mr. Brooks employer withheld the following amounts from his gross wages:
Federal Income Tax | $3,000 |
Employment Insurance Premiums | 856 |
Canada Pension Plan Contributions | 2,898 |
Registered Pension Plan Contributions | 2,800 |
Donations To The United Way | 480 |
Union Dues | 240 |
Payments For Personal Use Of Company Car | 1,000 |
Other Information:
- Due to an airplane accident while flying back from Thunder Bay on business, Mr. Brooks was seriously injured and confined to a hospital for two full months during 2020. As his employer provides complete group disability insurance coverage, he received a total of $4,200 in payments during this period. All of the premiums for this insurance plan are paid by the employer. The plan provides periodic benefits that compensate for lost employment income.
- Mr. Brooks is provided with a car that the company leases at a rate of $678 per month, including both GST and PST. The company pays for all of the operating costs of the car, and these amounted to $3,500 during 2020. Mr. Brooks drove the car a total of 35,000 kilome- tres during 2020, 30,000 kilometres of which were carefully documented as employment- related travel. While he was in the hospital (see Item 1), his employer required that the car be returned to company premises.
- In order to assist Mr. Brooks in acquiring a new personal residence in Winnipeg, his employer granted him a five year, interest free loan of $125,000. The loan qualifies as a home reloca- tion loan. The loan was granted on October 1, 2020, and, at this point in time, the interest rate on open five year mortgages was 5 percent. Assume the relevant ITR 4301 rate was 2 percent on this date. Mr. Brooks purchases a house for $235,000 on October 2, 2020. He has not owned a home during any of the preceding four years.
- Other disbursements made by Mr. Brooks include the following:
Advanced financial accounting course tuition fees | $1,200 |
Music history course tuition fees |
|
(University of Manitoba one week intensive course) | 600 |
Fees paid to financial planner | 300 |
Payment of premiums on life insurance | 642 |
Mr. Brooks employer reimbursed him for the tuition fees for the accounting course, but not the music course.
Required: Calculate Mr. Brooks net employment income for the taxation year ending December 31, 2020.
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