Reference no: EM132701109
Question - Olin Packett has been employed for over 10 years by a large Canadian public corporation. He works in their Victoria office.
For the 2019 year, his gross salary is $75,000. While he does not receive commissions, he was awarded a bonus of $15,000 during 2019 based on his sales performance. One-half of this is paid in December, 2019, with the balance to be paid in February, 2019.
During 2019, Olin's employer withheld the following amounts from his gross wages:
Federal Income Tax $14,350
Employment Insurance Premiums 860
Canada Pension Plan Contributions 2,749
Registered Pension Plan Contributions 3,100
Donations To The United Way 750
Union Dues 275
Payments For Personal Use Of Company Car 1,500
Premiums For Group Life Insurance Policy 200
Other Information
1. Olin is provided with a car that the company leases at a rate of $723 per month, including both GST and PST. The company pays for all of the operating costs of the car and these amounted to $4,200 during 2019. Olin drove the car a total of 33,000 kilometers during 2019, 27,500 kilometers of which were carefully documented as employment related travel. While he was in the hospital for 2 months (see Item 4), his employer required that the car be returned to company premises.
2. In order to assist Olin in acquiring a new residence in Victoria, his employer granted him a three year, interest free loan of $175,000. The loan was granted on July 1, 2019 and, at this point in time, the interest rate on open five year mortgages was 4.5 percent. Assume the relevant prescribed rate was 2 percent on this date. Olin purchases a house for $327,000 on October 2, 2019.
3. On his birthday, Olin received several gifts including a hoverboard and drone. In his enthusiasm for his new toys, he flew the drone over his neighbor's swimming pool while maneuvering the hoverboard on the sidewalk in front of the two homes to watch it. The result was a concussion, a broken leg, a shattered wrist and a drowned drone. He was unable to work for a period of two months. As his employer provides disability insurance coverage, he received benefits during this period totaling $8,500. All of the premiums for this insurance plan are paid for by the employer and totaled $560 for 2019. The plan provides periodic benefits that compensate for lost employment income.
4. Other disbursements made by Olin include the following:
Tuition Fee For Operations Management Course $1,300
Tuition Fee For Medieval History Course 950
Fees Paid To Employer Recommended Financial Planner 450
Olin's employer reimbursed for the tuition fees for both the operations management course and the medieval history course, as well as the fees paid to the financial planner.
5. Olin's employer made a payment to the group life insurance policy on his behalf. The premiums for 2019 totalled $200.
Required - Calculate Olin's net employment income for the taxation year ending December 31, 2019.