The objective of this assignment is to calculate net employment income for an individual Ron McDonald is a commission salesperson working for Golden Arches Foods ("GAF") a Canadian controlled private corporation. During the year ending December 31, 2015, his gross salary, not including commissions or allowances, was $115,211 . His commissions for the year totalled $ 1,382 . The following amounts were withheld by GAF from Ronald's gross salary (i.e. the following amounts were paid by Ron from his salary):

Federal income tax deducted 36,867

Canada Pension Plan (CPP) 2,480

Employment Insurance (EI) 931

Registered pension plan contributions (Note 1) 5,761

Payments for group disability insurance (Note 2) 889

Payments for personal use of company car (Note 3) 555

Union dues (Note 4) 461

Interest paid on employer provided loan (Note 5) 367

Life insurance premiums (Note 6) 808

Note 1: GAF made a matching contribution to Ron's RPP.

Note 2: Ron McDonald is covered by a comprehensive disability plan which provides periodic benefits during any period of disability to compensate for lost employment income. Since the commencement of his employment at GAF Jan. 2013, Mr. McDonald is required to pay 25% of the annual premium, which is withheld from his salary, as indicated above. During the current year, Mr. McDonald was hospitalized after one of his shoes was caught in an escalator at one of GAF's food manufacturing plants. The disability plan paid him $ 8,086 (on a periodic basis) to compensate for his loss of employment income during the 61 days he was hospitalized.

Note 3: GAF provides Mr. McDonald with a vehicle that was purchased several years ago. The current fair market value of the vehicle is $ 14,809 . The vehicle was originally purchased for $ 23,135 , including GST. Ronald drove the car a total of 22,799 km's of which 10,716 are personal in nature. GAF paid all of the operating costs of the car, a total of $ 3,702 for the current year. While Ron was hospitalized (see Note 2), he returned the company car to GAF, even though the employer did not require him to return the car during his absence.

Note 4: GAF is a unionized company and therefore Mr. McDonald must pay union dues each year. In addition, GAF provides a monthly allowance of $ 559 to cover Ronald's incidential sales expenses (NOTE: this allowance is considered in line with actual costs).

Note 5: On January 1, 2015, GAF provided Mr. McDonald with a low interest loan with a principal amount of 44,427 . The loan requires principal repayments of 4,443 on the first day of each calendar quarter, starting on April 1, 2015. The loan does not qualify as a home purchase or home relocation loan.

Note 6: GAF made a matching premium payments towards Ronald's life insurance.

Other Information: (a) On March 1, 2015, Mr. McDonald received stock options from GAF to acquire 879 shares for the price $ 26.66 per share. At the time the options are issued the shares are trading at $ 26.66 per share. In June, 2015, the shares have increased in value to $ 27.99 per share when Mr. McDonald exercises his options to acquire 879 shares. On December 31, Mr. McDonald sells all of the shares for $ 31.99 per share.

(b) Mr. McDonald incurred the following sales expenses related to his commission income: Meals (while out of town) $ 1,579 Lodging $ 1,974 Entertainment $ 711 Total Expenses $ 4,263

(c) GAF provided Mr. McDonald with a long-service award for his 3 loyal years of employment. The long-service award was a wrist watch with a fair market value of $576

(d) GAF provides Mr. McDonald with a membership at the local golf and country club, Seven Oaks. The annual membership costs $ 16,103 . Mr. McDonald uses the golf membership primarily (more than 50% of the time) for taking his clients golfing.

(e) During the year, GAF sent Mr. McDonald to a fast food convention in Las Vegas, NV. Ron's wife accompanied him because she has always wanted to see Celine Dion perform live. GAF paid all of the travel expense for both Ron and his wife, which equalled $ 1,110 per person.

(f) GAF declared bonuses to all of its employees on December 15, 2015. Mr. McDonald's bonus of $9,217 was included with his regular payroll electronic transfer on Jan.3, 2016.

(g) Assume that the relevant prescribed rates for 2015 are as follows:

Q1 1%

Q2 2%

Q3 3%

Q4 2%

Required: Prepare a memo addressed to Mr. McDonald calculating his minimum net employment income for the year ending December 31, 2015. List any assumptions made and describe why you have excluded any items not included in your calculation of net employment income. For full marks, it is necessary to include references from the Income Tax Act or other tax documents for each figure included in your calculation.

Recommended Approach for this Assignment: For each note/issue you need to determine if the note relates to a taxable or non-taxable benefit or employment expense, calculate taxable benefit or expense, determine appropriate ITA reference and list assumptions/explanation. Then simply combine all of the calculations/explanations from into one memo (in word, excel or both).