It is March 2021, and you have just finished meeting with Paul, a commission salesperson who lives in Vancouver. Paul requires help in determining whether he should claim his expenses for tax purposes as a salesperson or a non-salesperson. Paul has no other sources of income than the salary and commissions earned in this role.

Paul has been a commission salesperson for several years. For 2020, 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. Paul is responsible for paying any entertainment and promotional costs he incurs, as well as air transportation, hotel, and meal costs while he is travelling for business. Paul is not provided with an office by his employer and he used 10% of the family home for an office at home. Other costs are paid for by his employer.

Paul provides you with the following information for 2020:

Salary received during the year $180,000

Commission income received during the year 20,000

Expenses paid personally:

Utilities for house $2,000

Minor repairs to house 1,700

Property taxes for house 3,500

Travel costs (airline tickets and hotel costs) 15,000

Meals while travelling 5,000

Entertainment of clients 6,000

Promotional material (brochures) 200

House insurance 600

Mortgage interest 10,000

New computer and printer purchased this year 2,500

Golf membership for golfing with clients 4,000

a) Calculate the expense deductions for Paul as a salesperson and non-salesperson and explain any deductions excluded from your calculations.

b) Briefly explain whether Paul should claim expenses as a salesperson or nonsalesperson.