Carla Ram is a professional engineer. In 20X1, she sold her consulting business in Hamilton, Ontario, and moved to Vancouver, British Columbia, where she was employed by an equipment-manufacturing business. The following financial information is provided for the 20X1 taxation year:

1.Ram began her employment on February 1, 20X1, and during the year, received a salary of $90,000, from which the employer deducted income tax of $30,000 and CPP and EI of $3,340. In addition to her salary, Ram earned a commission of 1% of sales obtained by salespeople under her supervision. At December 31, 20X1, these sales amounted to $1,000,000, for which she had received $6,000 by year end, with the balance received in January 20X2. Ram also received an annual clothing allowance of $1,500 to maintain a professional dress standard. During the year, she spent $1,800 on clothing for work.

2. Ram’s employer does not have a company pension plan; instead, the employer contributed $13,000 directly to her RRSP in 20X1.

3. In December 20X1, Ram received a payroll advance of $3,000 against her January 20X2 salary to help fund a family holiday.

4. Ram is required to use her automobile for employment purposes and to pay certain other employment expenses. In 20X1, she incurred the following costs:

Meals and drinks for customer entertainment $ 1,600

Golf club dues used to entertain customers    1,100

Travel—airfares and hotel lodging     3,000

Purchase of a cell phone         800

Cell phone bill—pay-as-you-go plan (employment related)  1,200

Automobile expenses: 

Operating costs…………...........…………………..       3,800

 Parking………….........……...........……………..                100

 Interest on car loan….............……………………       2,200

 Purchase of new automobile in Ontario….      37,000

The automobile was used 60% of the time for business.

5. In 20X1, Ram took advantage of her employer’s counselling services. She received personal financial planning advice valued at $400, and her 14-year-old son received mental health counselling valued at $800.

6. Ram purchased a new home in Vancouver in 20X1 and incurred qualified moving expenses of $18,000 to transport her family and household effects to Vancouver. Her new employer reimbursed her for $10,000 of these costs and also paid her $20,000 for the loss incurred on the sale of her former residence.

7. In early 20X2, Ram intends to borrow $20,000 from her employer for the purpose of acquiring shares in the employer’s corporation. A low interest rate of 2% per annum will be payable on the loan.

Required:

1. Determine Ram’s minimum net income from employment for the 20X1 taxation year.

2. Briefly describe the tax implications from the intended employee loan to Ram.