Reference no: EM132831038
On September 1, 2020 you started work as a investment dealer at Top Corp. Prior to starting this job you were a commerce student at Ontario Tech University.
Top Corp. requires you to use your own car and pay expenses related to earning commission income. You purchase a car on September 1, for $21,000 (HST included). Top Corp. lends you $21,000 for the car, on the condition that you repay $7,000 a year, without interest for the next three years. Payments are due on December 31. The prescribed rate from September 1 to December 31, 2020 was 7%. The total amount you paid for gas and operating costs for the car was $1,600. The amount of capital cost allowance on the car relating strictly to employment income is $2,000. The total kilometers you drove from September 1 to December 31, 2020 is 12,500 of which 5,000 are personal kilometers.
Your net pay for the year was $16,520. Your T4 slip indicated:
Gross Salary 4,000
Commissions 18,000
Bonus 300
Employment Insurance Premiums ( 356)
Canada Pension Plan Contributions ( 944)
Charitable Donations ( 280)
Income Tax Deducted (4,200)
To earn commission income you paid the following:
Meals and entertainment 2,300
Client promotional material 1,500
- Top Corp. paid the airfare and accomodation for you and your partner to attend a conference in New York City. The trip cost Top Corp. $800 for each of you (a total of $1,600). Top Corp. also paid the $400 premium for group life insurance.
Required:
Problem 1: Calculate Net Employment Income.