William Loman has been employed for the past 6 years by PDF CO. (PDF), a Canadian public corporation incorporated in Ontario in 2014. PDF sells office cleaning supplies.

William has asked you, Maxwell Taxwell the trusted tax person at PDF for your help in the preparation of his 2020 personal tax return. William has provided you with the following information about his receipts, selected disbursements and the following information/calculations.

1.

Salary, bonus Deductions:

Income taxes $36,000 Canada Pension Plan premium 2,898 Utilities (500/2,500 * $1,600) 320 Employment Insurance premium 860 Meal costs during trips to plant 650 Cell phone purchased 800 Group accident disability insurance 900 premiums

Net Income

$113,000

(42,428) $ 70,572

2. Included in the above salary, bonus amount is a $4,000 bonus that was awarded to him on December 31st 2020 and paid on the next payroll run date of January 14th 2021.

3. Three years ago, PDF granted William an option to purchase 3,000 of its common shares at $32 per share. The options expire in 2022. At the time the option was granted, PDF’s shares were trading at the value of $36 per share. On January 31, 2020, William exercised all of the options and purchased 3,000 shares of PDF Co. (trading value at exercise date was $44 per share). On November 30, 2020, he sold all of the shares at $50 each.

4. During the 2020 year, a cash birthday gift of $350 was paid to William as well as a $300 gift card for The Keg for his cost saving suggestions that he provided. PDF Co. corporate policy was to deduct such gifts to determine corporate income.

5. PDF requires that William work out of his home from time to time. They have supplied him with a computer and printer for this purpose; however, he must pay for his own supplies. His house is 2,500 square feet and his workstation is in a room of about 500 square feet. He also uses the room as a den and guest room. Utility costs for his home for 2020 amounted to $1,600. William has not kept a log of the dates when he worked from home.

6. William travels out of town from time to time to PDF’s manufacturing plant. PDF reimburses him for all travel costs, except meal costs. The plant is only 90 km from the head office, and he always returns home the same day after working a normal eight-hour day.

7. In June 2020, William was in accident and was unable to work for six weeks. During this period, he received disability payments totalling $14,327 from Soo Disability Assurance Co. The $900 in disability insurance premiums were paid by William through payroll deduction.

8. PDF does not have a company pension plan. So, instead PDF paid $14,000 directly into William’s personal RRSP at Libro Credit Union.

9. PDF installed recreational facilities at its head office which allowed for proper distancing protocols to be followed. All employees are permitted to use these facilities free of charge. William used these facilities regularly. The equivalent value for similar facilities at a private club would be $1,300 per year, including applicable taxes.

10.William purchased a new cell phone for $800 including taxes to use while he was on the road. The employer did not reimburse him for this purchase.

11.In April of 2020 PDF paid local CPA Slim Shady $250 in cash of course to complete William’s 2019 and 2018 personal tax returns as William had not previously filed them.

12.William utilized PDF’s counselling services for his 13 year old son who received mental health counselling valued at $750 in the 2020 year.

Required:

Briefly explain why any items were included or omitted from the calculations above. Include your legislated/administrative reference source for each item, referencing the page number in the text is not required.