Ursula works as a Senior Account Manager for Decorous Stone and Tile (“Deco”), a Canadian public company. Her responsibilities include selling tiling products to various retailers across North America, as well as negotiating supplier contracts on behalf of her employer. Ursula’s financial information for 2019 is as follows:

a) Salary $180,000 Payroll deductions (paid by Ursula):

• Employment Insurance premiums: $860

• Canada Pension Plan contributions: $2,749

• Registered pension plan contributions: $8,000

Gym membership: $200 •

Income tax: $50,000

b) Deco paid for the following expenses on behalf of Ursula:

Golf club dues (Ursula uses the club exclusively for recreation): $2,500

• Group term life insurance premiums: $900

• Private health insurance premiums: $700

• Registered pension plan contributions: $8,000

c) Ursula is the top performing account manager at Deco, and consistently exceeds her sales targets. She earned commissions of $90,000 for her performance in 2019. By December 31, 2019 she had only received $10,000 of these commissions, and the rest will be paid in January 2020.

d) Ursula’s performance in 2019 was so exceptional, that she was also awarded a cash bonus of $20,000, a $300 bottle of champagne, and a $200 gift card for her outstanding service. The cash bonus was awarded in December 2019, but will not be paid until March 2020.

e) Due to the significant volume of sales Ursula manages, she is required to hire assistants at her own expense. Ursula hired her two daughters, Samantha and Rachel, and paid each of them a $6,000 salary in 2019. Samantha is in high school and worked on a part-time basis after school and over the summer. Rachel attends university and was too busy focusing on her studies to work a part-time job, but she was paid the salary anyways so that she would have some spending money while in school.

f) For the first six months of the year, Ursula used her own car to carry out her employment duties. The car was leased and the monthly lease payments were $1,000 plus 13% HST. The lease terminated on June 30, 2019.

g) On July 1, 2019, Deco provided Ursula with a company-owned vehicle. The company vehicle cost Deco $70,000 plus 13% HST. Deco also paid for all the operating costs of the vehicle effective July 1, 2019. The operating costs totalled $3,000 for July through December.

h) Ursula maintains a vehicle log that shows she drove approximately 1,667 kilometres each month in 2019. Employment use of the car each month was 60%.

i) Ursula was flown to China in March 2019 to negotiate several new supplier contracts on behalf of Deco. The travels costs, which were paid by Deco, totalled $8,000. This amount includes extra airfare of $2,000 to allow Ursula to bring her spouse on the trip.

j) Ursula incurred the following expenses out of pocket:

Car operating expenses (Jan 1 to June 30) $6,000

Transportation (other than car) and accommodation in Canada $5,000

Client entertainment meals $1,000

Advertising and promotion $3,000

Tablet computer $ 700

k) Ursula was granted an option to acquire 1,000 shares of Deco for $15 per share. At that time, Deco shares were trading for $15 a share. In December 2019, when Deco shares were trading for $18 per share, Ursula exercised the option and acquired 1,000 shares. Ursula did not sell any shares in 2019.

Required: 

Determine Ursula’s employment income for tax purposes for the 2019 taxation year. Provide a brief explanation for any amounts you have purposely excluded from the calculation.

Answer rating: 100% (QA)

Ursulas employment income for 2020 amounts to 204402 ... View the full answer