Question

You have been provided with the following information from your taxpayer. Mr. B works in company ABC Ltd He is required to use his own car and incur the necessary expenses to earn commission income.

Mr. B purchased a car on July 1, 2020 for $35,000 (including HST). The CCA on the vehicle is $2,000.

Total km = 20,000; personal km 4,000

Total commission received in 2020: $17,500

Mr. B incurred the following expenses to earn commission income:

Meals and entertainment: $13,300

Client promotional material: $12,500

Gasoline and operating expenses: $5,700

Required: Calculate the total eligible expenses for Mr. B for 2020.

Explain whether Mr. B has options in terms of which section (in s.8(1)) he can deduct employment expenses and what conditions are needed for each one.

I would suggest preparing your calculation in excel (do not copy and paste in word). Use supporting notes (1,2, 3, or a, b, c, etc.) for the following:

• Support each deduction or each amount that is not eligible to be deducted.
• When supporting your items ensure you are specific as to whether the item is from the ITA or from a CRA Administrative document (i.e. Folio or Guide).

Answer 1