jane Jackson resides in Edmonton, AB, and has been employed by Finlay Ltd. for a number of years as their accountant. Jane’s T4 slip for the current year indicates the following amounts were deducted from her gross salary of $80,000:
jane Jackson resides in Edmonton, AB, and has been employed by Finlay Ltd. for a number of years as their accountant.
- Jane’s T4 slip for the current year indicates the following amounts were deducted from her gross salary of $80,000:
|
Deductions |
Amounts |
|
CPP (maximum for the year*) |
|
|
EI (maximum for the year*) |
|
|
RPP contributions |
$4,500.00 |
|
Income tax deducted |
20,000.00 |
|
Union dues |
300.00 |
|
Charitable donations |
1,200.00 |
* See the current year’s tax rate sheet to determine the CPP and EI reported on the T4 slip.
- The following amounts are paid by Finlay Ltd. and not included on Jane’s current year T4 slip:
|
Paid by Findlay Ltd. |
Amounts |
|
Private health insurance plan premiums |
$1,800 |
|
Public health insurance plan premiums |
1,500 |
|
Group term life insurance policy premiums |
400 |
|
Allowance for incidental expenses ($400 per month) |
4,800 |
- Finlay Ltd. provided Jane with a motor vehicle for the entire year, and the company also paid for all operating costs for the vehicle, with $5,150 paid for operating costs in the current year. The vehicle was purchased by Finlay Ltd. three years ago at a cost of $50,000 (incl. GST). In the current year, Jane drove 22,000 kilometres; 10,000 kilometres were personal and 12,000 were for employment purposes.
- On October 1 of the current year, Jane purchased 1,000 shares of Finlay Ltd. under a stock option plan. Finlay Ltd. is a Canadian public corporation. The following information is provided:
|
Stock Options |
Amounts |
|
Option granted on Jan. 1 of the prior year, FMV |
= $10 per share |
|
Option price |
= $10 per share |
|
Option exercised on July 1 of the current year, FMV |
= $16 per share |
Note: On December 31, Jane continues to hold the 1,000 Finlay Ltd. shares, since she anticipates they will appreciate in value.
- In the current year, her mother travelled with her to Montreal when Jane attended a five-day conference for accountants. Finlay Ltd. reimbursed her for the full cost of $5,000, of which $2,000 (including GST) was for expenses she incurred for her mother.
- On July 1 of the prior year, Finlay provided Jane with an employee loan in the amount of $10,000 at the annual interest rate of 1%. The loan requires annual principal repayments of $2,000 on June 30 of each year. Jane made the first annual repayment on June 30 of the current year.
- Canada Revenue Agency’s interest rates for the calendar quarters in the current year are:
|
Quarter |
Rates |
|
Quarter #1 (January 1 to March 31) |
3% |
|
Quarter #2 (April 1 to June 30) |
2% |
|
Quarter #3 (July 1 to Sept 30) |
3% |
|
Quarter #4 (Oct 1 to Dec 31) |
3% |
- In the current year, Jane paid the following amounts personally:
- CPA professional dues (annual) in the amount of $800 (paid on June 30)
- Employment expenses: Jane paid for supplies (used for employment purposes) in the amount of $1,250 (expenses occurred throughout the year). Finlay Ltd. has authorized these expenses and filed Form T2200 accordingly.
- Other employment related expenses were as follows:
- Travel Costs (Hotel and Airline costs) $15,600
- Travel Costs (Meals) 11,300
- Advertising and Promotion 26,000
- Jane uses 25 percent of her personal residence as an office (T2200 form filed). During the year, the costs associated with her home were as follows:
- Interest Payments on Mortgage $9,100
- Property Taxes 3,750
- Utilities 1,925
- Insurance 1,060
- Furnace, Wiring and Foundation Repair 4,200
Calculate Jane’s net employment income for the current year, in accordance with sections 5 to 8 of the Income Tax Act. For each amount, determine if there is a taxable benefit and give brief explanations to support your response (i.e., explain why the amount is a taxable or non-taxable benefit).
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