Boba Fett has been employed in the accounts payable department as an A/P Supervisor for the past 3 years by Beskar Metal Works Inc. (BMW), a public Canadian corporation incorporated in Ontario in 2014. BMW is a leading wholesaler of beskar metals across Canada. Boba has asked you, Sasha Banks CPA, the trusted tax person at BMW for your help in the preparation of their 2021 personal tax return. Boba has provided you with the following information about receipts, selected disbursements and the following information/calculations.

1. Salary $130,000

Deductions:

Income taxes $36,000

Canada Pension Plan premium $3,166

Utilities (500/2,500 * $1,500) $300

Employment Insurance premium $889

Clothing costs $1,900

Home office supplies $600

Group accident disability insurance premiums $1,200 (44,055)

Net Income $ 85,945

2. On December 13th, 2021 Boba requested and received from BMW an advance of $6,500 against his 2022 salary. Boba needed the advance to pay for his family to attend Comicon in Detroit over the latter part of December. A cheque for $6,500 was paid through the accounts payable department at BMW. Bobas monthly payments in January 2022 was reduced by $6,500 as a means for Boba to pay back the advance.

3. In 2018 BMW granted Boba stock options to purchase a total of 7,000 shares over the next 6 years. The exercise price of these shares is $44 and the fair market value of the shares on the grant date was $40 per share. In 2021, Boba exercised the option to purchase 1,000 of the shares when the market price per share was $56. Boba did not dispose of these shares during 2021 and this was the first time Boba had purchased any shares.

4. Image is important at BMW, as such in 2021 Boba was provided with a $2,400 clothing allowance by BMW paid monthly through accounts payable, $200 each month. During the 2021 year, Boba spent $1,900 on clothing to be worn at the BMW offices.

5. BMW requires that Boba work from home from time to time, usually around month ends. They have supplied Boba with a laptop computer and printer for this purpose; however, Boba must pay for any supplies used at home and internet access. Babas house is 2,500 square feet in size and the workstation is in a room of about 500 square feet. The is also used as a den and guest room. Utility costs for the home for 2021 amounted to $1,500.

6. On November 11th, 2021 Boba was injured in a recreational fencing match and was unable to work for six weeks, but returned to work prior to Festivus Day. During this period, Boba received disability payments totalling $13,420 from Royal City Assurance Co. The $1,200 in disability insurance premiums were fully paid by Boba through payroll deduction.

7. While BMW values the image of its employees, it installed recreational facilities at its head office which allowed for proper distancing protocols to be followed. All employees are permitted to use these facilities free of charge. Boba used these facilities regularly. The equivalent value for similar facilities at a private club would be $1,800 per year, including applicable taxes.

8. BMW does not have a company pension plan. So, instead, BMW paid $13,000 directly into Bobas personal RSP at the Mos Eisley Credit Union.

9. In August of 2021 BMW paid local CPA Manny DeLorean $500 in cash to complete Bobas 2020 and 2019 personal tax returns as Boba had not previously filed them.

10. Boba utilized BMWs counselling services for their 12-year-old child who received mental health counselling valued at $850 in the 2021 year.

Required:

A. Determine Bobas employment income and taxable income for 2021 in accordance with the provisions of the Income Tax Act, CRAs administrative position and related announcements. Briefly explain why the items were included in the calculations. Include your legislated/administrative reference source for each item, referencing the page number in the text is not required.

B. For items that you have determined are not to be included in your employment and taxable income calculations from Part A, briefly explain why these items were excluded. Include your legislated/administrative reference source for each item, referencing the page number in the text is not required.

C. Lastly, in memo form of no more than 1 page, Boba is seeking tax advice that would be of benefit in future filings of their personal tax return as well as a possible career move into sales that will require travel outside of the office. Prepare this memo to Boba.