Reference no: EM132686457
On September 1, Maria Battelio, a Calgary resident, commenced work as an investment dealer with Top Investments Corporation. Prior to September, Maria was a fourth-year commerce student at the University of Alberta. Maria's contract of employment required that she use her own car and incur the necessary expenses to earn commission income. Maria purchased her car on September 1 for $21,000. Top Investments Corporation lent her the $21,000 for the car and she agreed to repay them $7,000 annually, without interest, on December 31 of each year. Assume that Maria's deductible capital cost allowance (net of personal use) on her automobile is $2,000.
Total distance travelled from September 1 to December 31
Total kilometres driven . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,500
Personal kilometres driven . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Maria received the following net pay in the year:
Gross salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,000
Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000
Bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300
Employment Insurance contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (356)
Canadian Pension Plan contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (944)
Charitable donations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (280)
Income tax withheld at source . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,200)
Net pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,520
To earn commission income, Maria incurred the following:
Meals and entertainment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 2,300
Client promotion materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500
Gasoline and operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,600
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,400
Top Investment paid for the airfare and accommodation for Maria and her spouse to attend a conference in New York. The trip cost $800 for each person attending the conference. The company also pays premiums of $400 per employee for group life insurance with coverage of $100,000. Assume a 7% prescribed rate of interest on the employee loan
Required:
Problem 1: Calculate Maria's income from employment (Office).