Decorous Stone and Tile ("Deco") is a Canadian public company andwholesale distributor of various commercial and residential tiling solutions. Deco sources its products from various manufacturers throughout Canada and Asia. Its primary customers are construction companies and big box retailers throughout North America. Deco also has showrooms in several large Canadian cities where it sells directly to local contractors. Deco's income statement for the year ending December 31, 2019 is as follows: Sales $52,000,000 Cost of sales 32,000,000 Gross profit 20,000,000 Expenses: Salaries and commissions $3,400,000 Employee bonuses 1,000,000 Employee benefits 933,000 Interest and bank charges 389,000 Amortization 1,100,000 General and administrative 3,450,000 Advertising and promotion 3,900,000 Legal and accounting 220,000 Loss on disposal of assets 122,000 Travel 8,000 Allowance for doubtful accounts 200,000 Donations 10,000 Total expenses 14,732,000 Net income for accounting purposes $ 5,268,000 

Additional information: 

1. The salary and commissions expense include $400,000 of stock based compensation relating to the company's stock option plan, and $200,000 of commissions that will be paid in January 2020. 

2. Employee bonuses were accrued at year end and will be paid in March 2020. 

3. Employee benefits expense includes $37,500 for golf memberships for Deco's account managers and company executives. 

4. Interest and bank charges expense includes $4,750 paid to CRA for late HST remittances, and $7,100 of financing fees to extend the terms of a mortgage on a 4 warehouse. The rest of the expense relates to funds that were borrowed in previous years to purchase warehouse and office space. 

5. General and administrative expenses include: 

• Site investigation costs for a proposed warehouse (site was rejected): $25,000 • Client meals and entertainment: $103,500 • Company holiday party: $33,000 • Permanent landscaping around three of the company's showrooms: $160,000 • Warranty accrual of $1,000,000 (actual claims in the year were $650,000) 6. Advertising and promotion expense includes $200,000 of advertising in a foreign newspaper that was distributed to Canadian customers 7. Legal and accounting expense includes: • Audit fees: $65,000 • General corporate affairs: $51,500 • Legal fees to enforce collection of overdue accounts receivable: $103,500 8. During the year, Deco incurred $100,000 in legal fees relating to the issuance of new shares. For accounting purposes, this amount was booked to equity, and is not included in the legal and accounting expense on the income statement. 9. The travel expense relates to sending a senior account manager to China to negotiate several new supplier contracts with various manufacturers in the region. Included in these costs is $800 for meals. 10.The allowance for doubtful accounts was calculated as 2% of the year end accounts receivable. 11.The UCC balances as at January 1, 2019 were: • Class 1: $5,000,000 • Class 8: $3,200,000 • Class 10: $400,000 • Class 12: nil 12.Deco had the following capital asset additions and disposals during the year: • On July 1, 2019, Deco implemented a new company policy to provide cars to its senior account managers. A luxury automobile was purchased for $70,000 plus 13% HST on that date. • Deco replaced the roof on one of its warehouses for a cost of $300,000. For accounting purposes this cost was capitalized (and not expensed in the income statement). 5 • Deco began outsourcing its deliveries to third parties as a means of cost reduction. This resulted in its entire fleet of delivery trucks being sold off for proceeds of $250,000. The trucks originally cost $750,000. • New furniture and fixtures were acquired for $325,000 in the year. Old fixtures originally costing $150,000 were sold off for proceeds of $25,000. • Small tools having an aggregate cost of $450,000 were sold off for proceeds of $100,000. • For accounting purposes, the dispositions of the trucks, fixtures, and small tools resulted in a loss on disposal of assets of $122,000 on the income statement. 13.Deco's class 1 assets qualify for the enhanced rate of CCA available for nonresidential buildings. Required: Using net income for accounting purposes as your starting point, determine Deco's business income for tax purposes for the 2019 taxation year.