Mr. Logan is a salesperson and is considering the following offers of employment at Woods Manufacturing Ltd.
Both of these offers would require that Mr. Logan start employment on January 2, 2017. The following information is given regarding Mr. Logan's employment.
Mr. Logan's gross salary for the year ending December 31, 2017 would be:
$204,000
ii) Mr. Logan would have the above fixed salary with no commissions.
iii) Mr. Logan's employer would withhold the following amounts from his income:
Federal Income Tax Withheld at Source
$51,000
CPP Contributions Withheld at Source
2,564
EI Insurance Premiums Withheld at Source
836
Employee's RPP Contributions
10,200
iv) Mr. Logan's employer would also make a matching contribution to the RPP in the amount of:
$10,200
v) The employer would pay for a Group Dental Plan with Sun Life for Mr. Logan at a cost of:
$600
Lease Payments per month is:
$491
Includes Lease Insurance per month of:
$54
The company would pay for all of the operating costs of the automobile which are estimated to be:
$19,000
vii) The company would provide Mr. Logan a Travel Allowance for Hotel, Meals and Airline
$33,000
CRA will consider this Travel Allowance to be reasonable in the circumstances.
No allowance is provided for Advertising, Promotion or Entertaining Client expenses.
Loan Amount
$112,000
Interest Rate on Loan
0%
Prescribed Interest Rate for 2017
6%
vi) Wood Manufacturing Ltd. would lease a vehicle for Mr. Logan at the start of his employment and he would have exclusive use of this vehicle for the duration of his employment.
viii) Wood Manufacturing Ltd. would provide a loan to Mr. Logan so that he can have additional funds for his investment portfolio. The loan would be required to be repaid after five years. The loan would commence on January 2, 2017 and the required interest would be paid annually on December 31.Mr. Logan's gross salary for the year ending December 31, 2017 would be:
$186,000
ii) Mr. Logan would also earn commissions based on his sales which are estimated to be:
$28,000
iii) Mr. Logan's employer would withhold the following amounts from his income:
Federal Income Tax Withheld at Source
$53,500
CPP Contributions Withheld at Source
2,564
EI Insurance Premiums Withheld at Source
836
Employee's RPP Contributions
10,700
iv) Mr. Logan's employer would also make a matching contribution to the RPP in the amount of:
$10,700
v) The employer would pay for a Group Dental Plan with Sun Life for Mr. Logan at a cost of:
$600
vi) The company will reimburse Mr. Logan for travel costs incurred for employment for Hotel, Meals and Airline .
vii) The company will not provide Mr. Logan with a vehicle but will provide a monthly vehicle allowance of:
$1,100
viii) Mr. Logan estimates that the total costs associated with owning a vehicle in 2017 will be:
Operating Costs
$14,800
Capital Cost Allowance ( Tax Depreciation) (100%)
$3,200
Financing Costs
$1,600
Other Information:
The following information is applicable to both of the alternative offers.
1. Both offer include a $1,000,000 face value life insurance policy. The company will pay all of the premiums
$3,000
2. Employment related expenses for 2017 are estimated to be as follows:
Hotels
$9,800
Air Travel
$8,400
Meals incurred while travelling
$8,500
Advertising and Promotion
$21,000
Entertaining Clients
$5,400
3. Whether it is the employer's automobile or his own personal vehicle, he would use the car throughout 2017.
53,000 KM are estimated to be driven in total for 2017
40,000 KM are anticipated by Mr. Logan to be related to employment activities.

4. Mr. Logan will be required to provide a home office where he will have a separate room used exclusively to meet clients on a
regular basis
The annual costs related to his home are provided below:
House Insurance
$1,300
Property Taxes
$4,400
House Heating Costs
$1,600
Mortgage Interest
$14,300
House Power Costs
$2,400
Painting (office space)
$140
Purchase of Desk and Chair
$1,500
Total Square Footage of Personal House: 2,000
Total Square Footage of Home Office:
150

Required
1. (a) Calculate Mr. Logan's minimum Net Employment Income for the year ending December 31, 2017 for the employment
offer #1. (provide all calculations and explanations)
1. (b) Calculate Mr. Logan's minimum Net Employment Income for the employment offer #2. (provide all calculations and
explanations)
2. Explain one advantage and one disadvantage from either offer.

Answer rating: 100% (QA)

Answer a Mr Logans Minimum net employment Income offer 1 Particular Amount Amount Gross Salay 204000... View the full answer