Mr. Logan is a salesperson and is considering the following offers of employment at Woods Manufacturing Ltd. Both of these offers would require that Mr. Logan start employment on January 2, 2017. The following information is given regarding Mr. Logan's employment.

Offer #1

Mr. Logan's gross salary for the year ending December 31, 2017 would be: $183,000

ii) Mr. Logan would have the above fixed salary with no commissions.

iii) Mr. Logan's employer would withhold the following amounts from his income:

Federal Income Tax Withheld at Source $45,750

CPP Contributions Withheld at Source 2,564

EI Insurance Premiums Withheld at Source 836

Employee's RPP Contributions 9,150

iv) Mr. Logan's employer would also make a matching contribution to the RPP in the amount of: $9,150

v) The employer would pay for a Group Dental Plan with Sun Life for Mr. Logan at a cost of: $1,400

vi) Wood Manufacturing Ltd. would lease a vehicle for Mr. Logan at the start of his employment and he would have exclusive use of this vehicle for the duration of his employment.

Lease Payments per month is: $593

Includes Lease Insurance per month of: $65

The company would pay for all of the operating costs of the automobile which are estimated to be: $18,000

vii) The company would provide Mr. Logan a Travel Allowance for Hotel, Meals and Airline $32,000

CRA will consider this Travel Allowance to be reasonable in the circumstances.

No allowance is provided for Advertising, Promotion or Entertaining Client expenses.

viii) Wood Manufacturing Ltd. would provide a loan to Mr. Logan so that he can have additional funds for his investment portfolio. The loan would be required to be repaid after five years. The loan would commence on January 2, 2017 and the required interest would be paid annually on December 31.

Loan Amount $131,000

Interest Rate on Loan 1%

Prescribed Interest Rate for 2017 6%

Offer #2

Mr. Logan's gross salary for the year ending December 31, 2017 would be: $185,000

ii) Mr. Logan would also earn commissions based on his sales which are estimated to be: $28,000

iii) Mr. Logan's employer would withhold the following amounts from his income:

Federal Income Tax Withheld at Source $53,250

CPP Contributions Withheld at Source 2,564

EI Insurance Premiums Withheld at Source 836

Employee's RPP Contributions 10,650

iv) Mr. Logan's employer would also make a matching contribution to the RPP in the amount of: $10,650

v) The employer would pay for a Group Dental Plan with Sun Life for Mr. Logan at a cost of: $1,400

vi) The company will reimburse Mr. Logan for travel costs incurred for employment for Hotel, Meals and Airline .

vii) The company will not provide Mr. Logan with a vehicle but will provide a monthly vehicle allowance of: $1,400

viii) Mr. Logan estimates that the total costs associated with owning a vehicle in 2017 will be:

Operating Costs $10,600

Capital Cost Allowance ( Tax Depreciation) (100%) $3,700

Financing Costs $1,100

Other Information: The following information is applicable to both of the alternative offers.

1. Both offer include a $1,000,000 face value life insurance policy. The company will pay all of the premiums $3,800

2. Employment related expenses for 2017 are estimated to be as follows:

Hotels $9,100

Air Travel $7,000

Meals incurred while travelling $7,400

Advertising and Promotion $20,000

Entertaining Clients $6,900

3. Whether it is the employer's automobile or his own personal vehicle, he would use the car throughout 2017. 58,000 KM are estimated to be driven in total for 2017 38,000 KM are anticipated by Mr. Logan to be related to employment activities.

4. Mr. Logan will be required to provide a home office where he will have a separate room used exclusively to meet clients on a regular basis

The annual costs related to his home are provided below:

House Insurance $1,100

Property Taxes $4,100

House Heating Costs $1,800

Mortgage Interest $18,100

House Power Costs $2,300

Painting (office space) $150

Purchase of Desk and Chair $2,200

Total Square Footage of Personal House: 2,000

Total Square Footage of Home Office: 190

Required:

1. (a) Calculate Mr. Logan's minimum Net Employment Income for the year ending December 31, 2017 for the employment offer #1. (provide all calculations and explanations)

1. (b) Calculate Mr. Logan's minimum Net Employment Income for the employment offer #2. (provide all calculations and explanations

2. Explain one advantage and one disadvantage from either offer.