On September 1, 2020 you started work as a investment dealer at Top Corp. Prior to starting this job you were a commerce student at University.

Top Corp. requires you to use your own car and pay expenses related to earning commission income. You purchase a car on September 1, for $21,000 (HST included). Top Corp. lends you $21,000 for the car, on the condition that you repay $7,000 a year, without interest for the next three years. Payments are due on December 31. The prescribed rate from September 1 to December 31, 2020 was 7%. The total amount you paid for gas and operating costs for the car was $1,600. The amount of capital cost allowance on the car relating strictly to employment income is $2,000. The total kilometers you drove from September 1 to December 31, 2020 is 12,500 of which 5,000 are personal kilometers.

Your net pay for the year was $16,520. Your T4 slip indicated:

Gross Salary 4,000

Commissions 18,000

Bonus 300

Employment Insurance Premiums ( 356)

Canada Pension Plan Contributions ( 944)

Charitable Donations ( 280)

Income Tax Deducted (4,200)

To earn commission income you paid the following:

Meals and entertainment 2,300

Client promotional material 1,500

Top Corp. paid the airfare and accomodation for you and your partner to attend a conference in New York City. The trip cost Top Corp. $800 for each of you (a total of $1,600). Top Corp. also paid the $400 premium for group life insurance.

Required: Calculate Net Employment Income. Show all calculations.

Part 1 (ITA 3) Division B Net Income to Division C Taxable income to Taxes Payable for Individuals + Bin #1 - Net Employment - losses carry forward 20 years and carry back 3 years (carrying baskets) ITA 3(a) + Bin # 2 - Net Business & Property - losses carry forward 20 years and carry back 3 years (carrying baskets) + Bin #4 - Other Income ITA 3 (b) + Bin #3 - Net Capital - losses carry forward for infinity and carry back 3 years (carrying basket) ITA 3 (C) - Bin #5 - Other Deductions = Sources of Income ITA 3 (d) Losses in current year from Bins 1, 2,4 = Division B Net Income ITA 110 Equivalent to Capital Gains Deduction for Employee Stock Options Payments included to calculation Division B but not included for Division C (e.g. social assistance) - Losses from other years (carrying baskets Bin #1 & 2) Losses from other years (carrying basket Bin #3 limited to Net Capital Income included in ITA 3 (b)) ITA 111 = Division C Taxable income X Applicable Tax Rates ITA 118 Tax Credits = Division E Taxes Payable for Individuals