Harry Mitchell has been employed by X Ltd., a Canadian-controlled private corporation, since early 2010, as a salesperson. The Company is located in Mississauga, Ontario, and Harry's sales territory is southwestern Ontario and he is required to travel regularly within this territory. Harry has asked you to prepare his 2020 employment income. He has provided you with the following information about his receipts and disbursements for the year.

Receipts and Disbursements:

i. Gross Salary..................................................................................................................$90,000

Commissions earned.................................................................................................... 25,000 Year-end bonus............................................................................................................. 30,000

ii. The employer paid the following amounts on his behalf:- Canadian Pension plan premium..........................................................$2,544

Employment insurance premium............................................................1,337

Extended Health Care, Manulife Insurance Company.........................1,000

Dental Plan Premium, Manulife Insurance Company........................... 500

Employee's health tax levy....................................................................... 1,100

Workers' compensation plan insurance................................................. 250

Group term life insurance......................................................................... 1,150

Fitness Club membership fees at Goodlife Fitness................................. 2,000

Registered Retirement Pension Plan contribution.................................. 6,000

Meals, entertainment ...................................................................................5,000

Accommodation...........................................................................................10,000

The group term life insurance was for $200,000 of insurance coverage. Harry's portion of the premium was withheld through payroll deductions, as shown below.

The payroll deductions were as follows:- Income taxes withheld............................................................................$15,000

Registered Pension Plan contribution.................................................. 6,000

Canada Pension Plan contribution....................................................... 2,544

Employment Insurance premium.......................................................... 1,337

Reimbursement for use of Company car.............................................. 900

Group term life insurance premium...................................................... 400

Additional Information:-

iii. During the year, Harry went to a sales conference with the Company for one week in the Bahamas. He brought along his spouse with him. Employees of the Company with their family stayed at the Company's townhouse in the Bahamas. The spouse's portion of the expenses was $4,000.

iv. As the townhouse in the Bahamas was not being used the week following the meeting, Harry and his spouse stayed on for another week and the Company charged them $1,000 for the rental for the week. Fair market value of such rentals is $2,000.

v. When he joined the Company, Harry was provided with a car by the employer. Effective as of September 1st.2020, the Company changed its policy of providing employer's cars to employees and required all employees to provide their own vehicle for use in the business.

Details of the car provided by the employer up to August 31st.2020 are as follows:

- Cost of the car purchased by employer(including all taxes).............$36,800

He used the car in 2020 for employment purposes 70% of the time and had driven a total of 30,000 kilometres.

Details of the car provided by Plato from September 1st.2020 are as follows:

- Cost of purchased car (including taxes).........................................$40,000

Operating expenses of the car for 3 months.................................$9,000

Money borrowed to purchase the car............................................$35,000

Total kilometres driven was 9,000 of which 6,000 was for business.

vi. On January 15th.2020 the Company offered all employees the right to purchase shares in the Company under a stock option plan. Each employee was granted the right to purchase 2,000 shares at a price of $12 per share. On February 1st.2020 Harry exercised his rights and purchased 1,500 shares when the market price per share was $13.50. Then on October 1st.2020 he purchased the remaining 500 shares when the market price was $15.00 per share.

viii. On May 1st.2020, Harry borrowed from the Company $250,000 ,under the Company's Home Loan Plan, to purchase a home in Mississauga. The interest cost of the loan from the Company was 2%. The fair market value of interest rates are given above.

ix. Corporate policy allowed Harry to purchase his employer's products for his personal use at a 20% discount from selling price. During the year, he purchased $1,000, at selling price before the discount.

xi. Harry paid dues of $350, including HST, for membership in the Canadian Association of Professional Salespersons and also paid $300, including HST to Seneca College for a course on personal motivation to help him in his career.

Required:-

a. Determine Harry's employment income for 2020 under S3 of the ITA. Clearly show all calculations whether or not relevant to your final answer.

b. Indicate why you excluded any of the above items from the final calculations.

Thank you for your help