You have accepted employment at I Love My Job Ltd., a public accounting company. Your partner has given you the following information relating to Leonard, a middle-management accountant, not engaged in negotiating contracts. Leonard works for Peter Productions Ltd. (PPL), a public corporation located in Ontario. During 2018, his gross salary from PPL was $80,000. The following amounts were deducted from his salary:

Income taxes $23,412

Registered pension plan (money purchase plan) $5,500

Canada Pension Plan contributions $2,594

Employment Insurance contributions $858

Charitable donations $350

Employees portion of Group Income Protection Premium $800

As a result of these deductions, Leonards net salary was $46,486.

Benefits for Leonard paid by the company include $5,500 as a contribution to the Registered pension plan (in other words, the company matched the amount contributed by Leonard). Other benefits for Leonard paid by the company include the following insurance premiums:

Dental plan Sun Life Company $175

Group income protection Royal Insurance Company $225

Extended health care Liberty Mutual $150

Group term life insurance General Insurance Co. $250

Note that the group term life coverage for Leonard was $300,000. Benefits paid under the Group income protection plan will be paid on a periodic basis.

In addition, you note the following information regarding Leonards receipts, disbursements, and other benefits for 2018:

He received a trip to Europe from PPL in appreciation of Leonards services (including HST). The value of the trip was $6,000. Leonard received $12,000 in periodic payments from Royal Insurance under the group income protection plan during a three-month illness. This plan had been in existence since 2006 and Leonards share of the premium since that date was $2,300. PPL paid $2,100 in an annual membership fee to a local golf club as a benefit to Leonard. Leonard is an avid golfer and uses the club whenever possible. The company gave Leonard a gift of a new watch in appreciation for his years of service. The value of the watch is $480. Leonard has never received a gift for service in the past.

Leonard was required to travel to various offices of the company on a regular basis to review divisional books and records. He is required to pay the costs of this travel himself. He receives a yearly allowance of $35,000 to cover these expenses. During 2018, Leonard paid $11,250 for meals, $23,750 for accommodation, and $6,250 for transportation. On March 12, 2018, Leonard received a loan of $900,000 from the company to purchase a new house. The interest rate on the loan was 1.0%. The prescribed rate for the first quarter was 3%, for the second quarter was 2.5%, for the third quarter was 3.5%, and for the fourth quarter was 2%.

PPL provided Leonard with financial counseling regarding his upcoming retirement at a cost of $950. The also paid an accounting firm to complete his 2017 tax return at a cost of $1,500.

Leonard himself paid $800 (including HST) as dues to a professional accounting body (recognized by statute). In addition to the salary received from PPL, Leonard received $2,000 in directors fees from Oakland Winery, Ltd.

Questions:

1. Your partner has asked that you to determine Leonards Division B employment income for tax purposes for 2018. Be sure to show all calculations, whether or not necessary to the final answer. Make sure that your schedules are clear and legible.
2. In point form, indicate and explain why you did not include any of the above amounts in your calculation of employment income.