Mr. Robert Paris is a salesman for Eiffel Ltd., a public corporation. He provides you with the following information.
Salary income $30,000
Commission Income $45,000
He is covered by his employer’s group term insurance plan for 2x his salary income. The premium paid by Eiffel Co. is $8 for each $1,000 of coverage.
On January 1, 2007, he received the following loan from Eiffel Co: • $80,000 to purchase a home (he transferred from Quebec City on December 2006)
The loan carried an interest at 2%. As at December 31, 2007, no interest has been paid on the loan and no portion of the capital has yet been repaid on these loans.
His contribution to the company’s defined benefit plan is $4,000.
He bought a new car in 2007 for $26,000 and incurred the following expenses in earning his commission income: • Automobile expenses (re: total of 20,000 km driven) $8,000 • Meals and entertainment $2,600 • Convention expenses of $2,000 on conference entitled “The Art of Enticement – a Salesman Approach” • Other travelling expenses (taxi, train, hotels) of $1,600
Note: 70% of his 20,000 km pertain to employment
On June 5, 2007, he acquired 150 shares through the employee stock option plan for $18/share. At the time the shares were trading on the Toronto Stock Exchange for $30. Mr. Paris was granted the option in 2007 at a time when the shares were trading for $18.
On December 3, 2007, he sold 100 shares fro $40 each. Prior to June 5, 2007, Mr. Paris did not own any shares of Eiffel Ltd. and he did not make any election.
For 2007, the prescribed rates for employee loans are as follows:
Required – compute Mr. Paris’ minimum 2007 net income. Ignore GST/QST.
Martinez Power Tool Corporation Ltd. has carried on business in Canada since its incorporation under the Canada Business Corporations Act in 1972. Its net income for the year ended 2007, as determined