1. Over the past 5 years Paul Brereton has been working for a local bank as a small business banker. Because of his gained experience he has decided to start a small tax preparation company to supplement his income. The Business commenced January 1^st, 2018.

On that date, he acquired furniture (cca 20%) costing $2,500, a computer (cca 55%) for $900, and software (cca 100%) for business activities of $500. He also has a separate phone line installed which will be solely used for the tax prep business.

The business will be run out of Paul's home making exclusive use of 10% of the total available floor space.

During the period of Jan 1^st to December 31^st, 2018, his business had total service revenue of $65,000. Cost associated with these services are as follows:

Postage Expense $1,500

Misc Office Supplies $800

Telephone Exp $350

Marketing and Printing $2,500

Paul's home was purchased several years ago for $275,000 (class 1 CCA 4%) of which $75,000 was allocated to land. Cost accrued with respect to the home for the year ending Dec 31^st, are as follows:

Utilities $3,000

Mortgage Interest Paid $2,750

Home Insurance $300

Property Taxes $1,250

Repairs and Maintenance $2,000

Total $9,300

A) Can Mr. Brereton deduct workspace in the home costs?

B) Computer the minimum net business income or loss that Paul must report for 2018.

Answer rating: 100% (QA)

A Yes Mr Brereton can deduct workspace in the home costs To calculate thi... View the full answer