It is March 2017, and you have just finished meeting with Paul and Christine, a married couple, who have come to you for some tax advice. They brought along some information about Paul's employment income and Christine's business income. Paul and Christine live in Vancouver. Since 2013, Paul has been a commission salesperson working for a company that sells technology solutions to businesses. For 2016, he earned a base salary of $180,000 plus commissions based on his sales. He travels across the country for work and is very successful. He is responsible for paying certain expenses when he is travelling, while his employer is responsible for other expenses. Paul is responsible for any entertainment and promotional costs he incurs, as well as air transportation, hotel and meal costs while he is travelling for business. Beginning March 1, 2016, Paul's employer provided him with a leased vehicle for his driving needs for the rest of the year. He had no car prior to this date. As his employer does not have an office in Vancouver, Paul operates out of his home office, where principally conducts business. He has a desk and computer equipment that he owns. This office represents 10% of the floor space in Paul's home. While he does not see clients at his home, he does use this space exclusively for business. Paul and Christine are in their late thirties. They have two children. Valentina is their youngest, at six years old. Valentina was in school full time in 2016, but because of her parents' busy schedules, she was in daycare before and after school. The total cost of her daycare is $5,000 for 2016. The older child is Victor. He is 12, and has a severe and prolonged physical impairment that markedly restricts the use of his legs. Because of his disability, he attends a private school, where annual tuition is $15,000. There are no child care expenses in this tuition amount. Both children attend overnight summer camp for four weeks each summer at a cost of $1,000 per week for each child. Paul and Christine have made contributions of $1,000 to each child's RESP account during 2016. Christine and Paul provide you with the following information for 2016: Paul: Salary paid during the year Commission income paid during the year $180,000 20,000 Expenses paid personally: Utilities for house Minor repairs to home Property taxes Travel costs (airline tickets and hotel costs) Meals while travelling Entertainment of clients Promotional material House insurance Mortgage interest New computer and printer purchased this year Golf membership for golfing with clients 2,000 1,700 3,500 15,000 5,000 6,000 200 600 10,000 2,500 4,000 6,000 2,000 500 960 Benefits paid for by employer: Vacation for Paul and Christine as a reward for having the largest increase in sales this year Health and dental benefits Long-term disability insurance with wage-loss protection Group term life insurance Financial planning annually, employer pays for one meeting with a financial planner for each employee Gift to Paul provided on his birthday front-row tickets to a hockey game Monthly lease payment on the company car Other car-operating costs (maintenance, fuel, insurance) Total kilometres driven Personal kilometres driven 1,000 900 750 6,000 40,000 km 15,000 km Gift from customer: Golf clubs as a gift from a very happy customer $1,200 Paul's payment to his employer for personal use of the vehicle within 45 days of the year end 1,500 Paul has notified his employer that, if he is eligible, he will elect to utilize the lesser of" calculation for the operating cost benefit on the vehicle. Paul owns shares in the Royal Bank of Commerce, which is a publicly traded company. He received a dividend of $4,000 from these shares in 2016. In his spare time, Paul invests in the stock market. In 2015, he purchased 500 shares of Canadian Internet Providers Limited for $93 per share. In January of 2016, he purchased other 500 shares for $108 per share. In April 2016, he needed some cash for a home renovation project and sold 400 shares for $152 per share. Paul made RRSP contributions of $18,000 for the 2016 taxation year. This is his first RRSP contribution, and his notice of assessment shows an RRSP deduction limit of $250,000 for 2016. Paul's employer has deducted the maximum annual CPP and El contributions from his paycheques for 2016. Paul's net income for tax purposes for 2016. Briefly explain whether Paul should claim expenses as a sales or non-sales employee. For all calculations, provide an explaination why items were excluded, if any. Show all calculations for sales and non-sales employee expenses. (19 marks) It is March 2017, and you have just finished meeting with Paul and Christine, a married couple, who have come to you for some tax advice. They brought along some information about Paul's employment income and Christine's business income. Paul and Christine live in Vancouver. Since 2013, Paul has been a commission salesperson working for a company that sells technology solutions to businesses. For 2016, he earned a base salary of $180,000 plus commissions based on his sales. He travels across the country for work and is very successful. He is responsible for paying certain expenses when he is travelling, while his employer is responsible for other expenses. Paul is responsible for any entertainment and promotional costs he incurs, as well as air transportation, hotel and meal costs while he is travelling for business. Beginning March 1, 2016, Paul's employer provided him with a leased vehicle for his driving needs for the rest of the year. He had no car prior to this date. As his employer does not have an office in Vancouver, Paul operates out of his home office, where principally conducts business. He has a desk and computer equipment that he owns. This office represents 10% of the floor space in Paul's home. While he does not see clients at his home, he does use this space exclusively for business. Paul and Christine are in their late thirties. They have two children. Valentina is their youngest, at six years old. Valentina was in school full time in 2016, but because of her parents' busy schedules, she was in daycare before and after school. The total cost of her daycare is $5,000 for 2016. The older child is Victor. He is 12, and has a severe and prolonged physical impairment that markedly restricts the use of his legs. Because of his disability, he attends a private school, where annual tuition is $15,000. There are no child care expenses in this tuition amount. Both children attend overnight summer camp for four weeks each summer at a cost of $1,000 per week for each child. Paul and Christine have made contributions of $1,000 to each child's RESP account during 2016. Christine and Paul provide you with the following information for 2016: Paul: Salary paid during the year Commission income paid during the year $180,000 20,000 Expenses paid personally: Utilities for house Minor repairs to home Property taxes Travel costs (airline tickets and hotel costs) Meals while travelling Entertainment of clients Promotional material House insurance Mortgage interest New computer and printer purchased this year Golf membership for golfing with clients 2,000 1,700 3,500 15,000 5,000 6,000 200 600 10,000 2,500 4,000 6,000 2,000 500 960 Benefits paid for by employer: Vacation for Paul and Christine as a reward for having the largest increase in sales this year Health and dental benefits Long-term disability insurance with wage-loss protection Group term life insurance Financial planning annually, employer pays for one meeting with a financial planner for each employee Gift to Paul provided on his birthday front-row tickets to a hockey game Monthly lease payment on the company car Other car-operating costs (maintenance, fuel, insurance) Total kilometres driven Personal kilometres driven 1,000 900 750 6,000 40,000 km 15,000 km Gift from customer: Golf clubs as a gift from a very happy customer $1,200 Paul's payment to his employer for personal use of the vehicle within 45 days of the year end 1,500 Paul has notified his employer that, if he is eligible, he will elect to utilize the lesser of" calculation for the operating cost benefit on the vehicle. Paul owns shares in the Royal Bank of Commerce, which is a publicly traded company. He received a dividend of $4,000 from these shares in 2016. In his spare time, Paul invests in the stock market. In 2015, he purchased 500 shares of Canadian Internet Providers Limited for $93 per share. In January of 2016, he purchased other 500 shares for $108 per share. In April 2016, he needed some cash for a home renovation project and sold 400 shares for $152 per share. Paul made RRSP contributions of $18,000 for the 2016 taxation year. This is his first RRSP contribution, and his notice of assessment shows an RRSP deduction limit of $250,000 for 2016. Paul's employer has deducted the maximum annual CPP and El contributions from his paycheques for 2016. Paul's net income for tax purposes for 2016. Briefly explain whether Paul should claim expenses as a sales or non-sales employee. For all calculations, provide an explaination why items were excluded, if any. Show all calculations for sales and non-sales employee expenses. (19 marks)