Problem 2 Individual Income Tax Calculation of NIFTP

Ms. Matilda Jones is a Certified Financial Planner (CFP) with many years of successful experience. In 2019, she decided that she was not adequately appreciated in her current position with a large financial institution in Brampton, Ontario. Given this, she resigned on November 1, 2019. After several months of investigation, she decided to take a position with Retirement Planners Ltd. (RPL), a Canadian controlled private corporation located in London, Ontario. She commenced working for RPL on May 1, 2020.

Other Information: 1. Because of her strong professional reputation, RPL paid her a signing bonus of $12,000. The signing bonus was paid on June 1, 2020.

2.During the period May 1, 2020 through December 31, 2020, Matilda earned salary of $124,000. The Company withheld the following amounts from her salary: Income Taxes $18,650 Canada Pension Plan (CPP) 2,594 Employment Insurance (EI) 858 Registered Pension Plan (RPP) Contributions 3,700 Payment For Personal Use Of Automobile 880

3. RPL contributed $3,500 on Matildas behalf to the Companys registered pension plan (RPP) in 2020.

4. RPL provides group medical coverage to all of its employees. The private health plan premiums paid by RPL on Matildas behalf cost $562 for the year.

5. On December 12, 2020, a bonus of $10,600 was accrued for Matilda by RPL. Matilda received $5,300 of this bonus on December 29, 2020, with the remainder being paid on January 17, 2021.

6. During the year, Matilda received two non-cash gifts, a birthday gift worth $350 and a Christmas gift worth $300

7. RPL has a stock option plan for its employees. Under this plan, employees are permitted to acquire a limited number of option shares at 10 percent below their fair market value on December 1 of each year. The company hires valuators to determine the fair market value at each of those dates. Matilda acquires 200 shares on December 1, 2020 for cash of $7,200. On December 15, 2020, she sells 100 of these shares for $4,100. Ignore any potential capital gains

. 8. RPL provides Matilda with a vehicle that was purchased in 2020 for $45,200, including HST. The vehicle was used by Matilda for all months during the period May 1, 2020 through December 31, 2020. During this period, she drove the vehicle a total of 52,000 kilometers, of which 40,000 were related to her employment duties. RPL pays all operating and maintenance costs, a total of $8,900 during the period that Matilda used the car. RPL withheld $110 per month from her salary to pay for her personal use of the vehicle.

9. Matildas new job requires her to meet with clients outside of regular office hours throughout the week. RPL will sign form T2200 (Declaration of Conditions of Employment) that she is required to pay for certain employment expenses without reimbursement and use a portion of her home for work. Matilda has set aside a separate room in her apartment to be used exclusively to meet with clients. She used this office space between May 1 and November 30, 2020 (7 months). This home office occupied 150 square feet of the 1,250 square feet available in her apartment. RPL has agreed to let Matilda use head office space as needed during December. Home office related costs are as follows: Monthly Rent $2,200 Office Furniture 3,400 Computer Purchase 896 Stationery And Office Supplies Purchased 147 Monthly Phone Line Charge (For 7 Months) 210 Employment Related Long Distance Calls (For 7 Months) 110 Electricity Charge (For 7 Months) 350 Paint For Apartment 165 Property Insurance (7 Months) 175 REQUIRED. Determine Matildas net employment income for 2020. Indicate why you have or have not included any of the preceding items in your calculations.