Q:
Mr. Carlos Segovia is a very successful salesperson and is employed by a large Canadian public company. For 2009, his base salary is $252,000. In addition, he earns commissions of $18,500. Other data relevant to Mr. Segovias 2009 employment income is as given:
1. Mr. Segovia is required by his employer to pay all of his own employment related expenses. He is also required to give his own office space. Mr. Segovia has a Form T2200 signed by his employer that certifies this.
2. His travel costs for 2009, mainly airline tickets, food, and lodging, total $29,000. This includes $9,500 spent on business meals.
3. His annual dues to the Salespersons Association a trade union were $450.
4. He is a member of his employers registered pension plan. In 2009, his employer contributed $5,500 to this plan on his behalf. In addition, $5,500 was withheld from his salary and contributed to the plan.
5. During 2009, Mr. Segovia was billed a net of $13,500 by his golf club. Of this amount, $3,300 was the annual membership fee, with the remainder being charges for drinks and meals with clients.
6. During 2009, Mr. Segovia used 35 percent of his personal residence as an office. The designated space is where he principally performs his employment duties. Interest payments on his mortgage totaled $11,500 for the year and property taxes were $4,800. Utilities paid for the house totaled $2,600 and house insurance paid for the year was $1,250. Other maintenance costs related with the property amounted to $1,450. Mr. Segovia does not intend to deduct CCA on the home office portion of the house.
7. For business travel, Mr. Segovia drives a car that he brought in 2008 for $49,000. He financed the purchase of the car through his local bank and, for 2009, the interest on the loan was $2,250. In 2009, he drives the car a total 60,000 kilometers, 45,000 of these being for employment related travel. His accountant has advised him that, if the car were used 100 % for employment related activities, the CCA (tax depreciation) for 2009 could be $7,650. The costs of operating the car In the year totaled $7,500.
8. As rewards for winning several sales contests during the year he received three non-cash awards. The first, a spa weekend at a local hotel, had a fair market value of $300. The second was a $400 gift-certificate at a means clothing store. The third award, a bottle of 1995 Haut Brion, had a fair market value of $450.
9. In 2008, his employer granted him options to buy 1,000 shares of the company's stock at $20 per share. At the current time of the grant, the shares were trading at $19 per share. On 1st June, 2009, all of these options are exercised. At this time the shares are trading at $31 per share. He does not sell the shares in 2009.
10. Suppose that Mr. Segovia makes any elections that are available to reduce his income inclusions or increase his deductions. 2010 Tran Chung 29
Required:
Evaluate Mr. Segovias minimum net employment income for the 2009 taxation year. Ignore PST and GST considerations.