Reference no: EM132651355
Question - Peter, who is a salesman in Regina, has incurred the following expenses in connection with his employment in 2019. He was not reimbursed and did not receive an allowance in respect of any of these expenses. Peter has a Form T2200, signed by his employer attesting to all of these expenses.
(1) Peter uses one room in his home exclusively as a home office. He uses his home office most days and evenings to do paperwork and make phone calls and his home office computer is connected to his employer's computer system. He visits his office at his employer's premises approximately once a week and spends the remainder of the time on the road, making sales calls throughout Western Canada.
(2) The following expenses relate to Peter's home office which occupies 10% of the square footage of his house:
Utilities - $3,100
Mortgage Interest - $12,000
House Insurance - $1,150
Municipal Taxes - $3,050
Maintenance and Repairs - $2,700
Total - $22,000
10% of total - $2,200
CCA on computer equipment - $1,035
Rental of photocopier - $1,200
Office supplies - $750
Cell phone charges (empl. portion) - $700
Long distance calls related to business - $1,000
(3) Peter also has the following promotional expenses
Meals (with clients, Peter's portion) - $2,000
Client's Meals - $2,100
Theatre tickets - $1,200
Promotional gifts - $1,300
Country club membership - $3,200
(4) Peter paid the following auto expenses:
Gas and Oil - $2,000
Insurance - $1,100
License - $90
Repairs - $800
Parking (empl. related) - $320
Peter purchased the car that he uses for employment purposes on Aug. 1, 2018 for $50,000 plus $2,500 GST and $2,500 PST. Peter did not claim CCA on the car in 2018; therefore, the capital cost allowance rate for the car is 30% in 2019. The care was driven a total of 40,000 km in 2019, 32,000 of the km driven related to Peter's employment use.
(5) Peter also incurred the following travel expenses (while away at least 12 hours):
Airfare - $4,520
Meals and accommodation (included $2,400 for meals) - $4,960
Registration fees for convention in Vancouver to increase product knowledge - $800
Out-of-town entertainment - $3,200
(6) Interest on bank loan:
To buy computer equipment for the home office in (1) above - $320
To buy the car in (4) above - $800
(7) Peter's remuneration from employment is as follows:
Salary - $40,000
Bonus based on company sales - $35,000
(8) GST is 5% and PST is 5%
Required - Calculate income and expenses assuming he is an employee and assuming he is self-employed. Present him with the results with two columns.