On January 2, 2020, Mary Brown was transferred from Vancouver to Kingston by her employer to accept a position as sales manager with FWT Limited. She was employed there until March 31, 2020. Details of the 2020 T4 from FWT Limited were as follows:

Gross earnings Less: deductions withheld at source

CPP contributions EI premiums Income tax withheld RPP contributions

$ 12,500.00

445.50

203.75 4,750.00

625.00

When Mary arrived in Kingston, she and her family were unable to find a house to purchase until February 1, 2020. FWT Limited provided an apartment for her and her family for the month of January at no-charge. The fair rental value of the apartment was $1,200.00 (per month).

Mary was required by the terms of her employment contract to provide her own vehicle for business use. She leased a car for the three-month period at a cost of $960 (includes HST) per month. This amount does not include insurance. She drove the car a total of 9,000 kilometers of which 7,200 kilometers were for business use. Mary paid the total operating costs in the amount of $950. FWT Limited paid her a vehicle allowance of 65 per kilometer driven for business use.

(b) On April 1, 2020, Mary left her employment with FWT Limited to accept a position as salesperson with SLC Incorporated, until December 31, 2020. Details of the 2020 T4 were as follows:

Gross earnings Commissions (included in gross earnings)

Less: deductions withheld at source CPP contributions EI premiums Income tax withheld

RPP contributions

$ 20,800.00 3,000.00

856.35

339.04 7,900.00 1,250.00

In recognition of her excellent performance, SLC Incorporated gave Mary an award, which consisted of a weekend trip to Toronto, valued at $1,500.

BTAX1 Winter 2021

As a condition of her employment with SLC Incorporated, Mary was required to travel out of town for and pay the related expenses. She was also required to provide her own vehicle for business use. The company paid her a travel allowance in the amount of $200 per month and a vehicle allowance of $75.00

per month (for 9 months).

Accommodations Train fares Meals, while out of town

The actual travel costs paid by Mary were as follows:

$ 2,000 650 1,000

She also paid the following additional expenses to earn commissions:

Entertainment of clients (not part of out-of-town travel costs) Advertising Office supplies

$ 1,200 1,550 285

Mary continued to lease the vehicle she had been using while employed by FWT Limited. She also paid the total operating costs incurred from April 1, 2020 to August 31, 2020 in the amount of $1,150.00. Mary drove the vehicle a total of 10,000 kilometers from April 1, 2020 to August 31, 2020 of which 7,500 kilometers were for business use.

On August 31, 2020, she cancelled the lease contract on this vehicle and purchased her own vehicle at a cost of $39,000 (includes HST). Mary drove the vehicle a total of 6,500 kilometers from September 1, 2020 to December 31, 2020 of which 4,875 kilometers were for business use. The total operating costs paid by Mary during this period (122 days) were $920 and the interest she paid on the loan to purchase this vehicle was $1,300.

Mary was also required by the terms of her employment with SLC Incorporated, to conduct business out of her home.

The total house expenses for the period February 1 to December 31, 2020 were as follows:

Mortgage interest Property taxes Heat and hydro Insurance

Minor repairs

$5,000 2,400 1,800

650 500

Mary's office occupies approximately 200 square feet of the total 2,000 square feet of the house.

(continued next page...)

BTAX1 Winter 2021

Required:

Calculate Marys net income from employment for 2020. Your answer should be such that it results in the lowest possible net income from employment. Be sure to include organized, detailed calculations and notes in your supporting documentation. (Assume that Mary lives in an alternate universe, where there is no pandemic, and 2020 was the best year ever.)

Hint: For the vehicle and travel allowances you will calculate, and include in income, the expenses are deductible under employment expenses!! (That was a HUGE hint)