BTAX1 Winter 2021 Question #1 (8 marks) a) Wayne Greatsky is a star outfielder with the Toronto Blue Jays. In addition to his $500,000 annual baseball salary, Wayne, who lives in California, USA, is a partner in an unincorporated sporting goods store, which is run by his brother. In the current year, Wayne's share of the profit was $75,000. Although Wayne hates cold weather, the circumstances were such that he spent a fair amount of time in Canada. Specifically, his contract came up for renewal and he spent 5 days in the last part of March and early April (before the season started) in Ontario. Next came the season - 80 home games plus the odd exhibition game which required Wayne to spend a further 118 days in Canada. Once the Blue Jays were eliminated from pennant competition, Wayne felt that he would be free to accept a very lucrative offer from Dalhousie University (in Nova Scotia) to conduct a batting clinic during the month of October, for the University's girl's softball team. Wayne accepted this contract which ran from October 1st to October 31st. Unfortunately, on the last day of the clinic, Wayne tripped over a misplaced baseball bat and broke his leg. He spent the following 28 days in a hospital in Halifax and was finally able to go home at the end of November. On December 1st, Wayne received a phone call from the Tiny Tim Fund asking him to be a guest speaker in Toronto during the weekend of December 18-19, at a fund-raising dinner. The chairman of the event informed Wayne that his airfare would be paid for out of the proceeds of the dinner, but the engagement would not include any fee. Required: Advise Wayne if he should choose to accept this speaking engagement or send a generous donation instead. Give reasons to support your answer and describe the relevant income tax implications. b) Mrs. X, a Canadian citizen, left Canada in 2004 to settle in a country with which Canada has no tax treaty. In 2015, her daughter came to Canada to attend university. After completing her studies, the daughter decided to remain in Canada on a permanent basis. In January 2020, Mrs. X acquired a house in Canada, in which she stays when she comes to visit her daughter. She also opened a bank account in Canada, with deposits sufficient to meet her needs when she visits her daughter. Interest is paid periodically on these amounts. She has no other income from Canada. During 2020, she visited her daughter from June 1st to August 15th and from November 3rd to December 28th. Required: Determine Mrs. X's residency status for tax purposes for 2020. Give reasons to

BTAX1 Winter 2021 Question #2 (45 marks) (a) On January 2, 2020, Mary Brown was transferred from Vancouver to Kingston by her employer to accept a position as sales manager with FWT Limited. She was employed there until March 31, 2020. Details of the 2020 T4 from FWT Limited were as follows: Gross earnings $ 12,500.00 Less: deductions withheld at source CPP contributions 445.50 EI premiums 203.75 Income tax withheld 4,750.00 RPP contributions 625.00 When Mary arrived in Kingston, she and her family were unable to find a house to purchase until February 1, 2020. FWT Limited provided an apartment for her and her family for the month of January at no-charge. The fair rental value of the apartment was $1,200.00 (per month). Mary was required by the terms of her employment contract to provide her own vehicle for business use. She leased a car for the three-month period at a cost of $960 (includes HST) per month. This amount does not include insurance. She drove the car a total of 9,000 kilometers of which 7,200 kilometers were for business use. Mary paid the total operating costs in the amount of $950. FWT Limited paid her a vehicle allowance of 65 per kilometer driven for business use. (b) On April 1, 2020, Mary left her employment with FWT Limited to accept a position as salesperson with SLC Incorporated, until December 31, 2020. Details of the 2020 T4 were as follows: Gross earnings $ 20,800.00 Commissions (included in gross earnings) 3,000.00 Less: deductions withheld at source CPP contributions 856.35 EI premiums 339.04 Income tax withheld 7,900.00 RPP contributions 1,250.00 In recognition of her excellent performance, SLC Incorporated gave Mary an award, which consisted of a weekend trip to Toronto, valued at $1,500.

As a condition of her employment with SLC Incorporated, Mary was required to travel out of town for and pay the related expenses. She was also required to provide her own vehicle for business use. The company paid her a travel allowance in the amount of $200 per month and a vehicle allowance of $75.00 per month (for 9 months). The actual travel costs paid by Mary were as follows: Accommodations $ 2,000 Train fares 650 Meals, while out of town 1,000 She also paid the following additional expenses to earn commissions: Entertainment of clients (not part of out-of-town travel costs) $ 1,200 Advertising 1,550 Office supplies 285 Mary continued to lease the vehicle she had been using while employed by FWT Limited. She also paid the total operating costs incurred from April 1, 2020 to August 31, 2020 in the amount of $1,150.00. Mary drove the vehicle a total of 10,000 kilometers from April 1, 2020 to August 31, 2020 of which 7,500 kilometers were for business use. On August 31, 2020, she cancelled the lease contract on this vehicle and purchased her own vehicle at a cost of $39,000 (includes HST). Mary drove the vehicle a total of 6,500 kilometers from September 1, 2020 to December 31, 2020 of which 4,875 kilometers were for business use. The total operating costs paid by Mary during this period (122 days) were $920 and the interest she paid on the loan to purchase this vehicle was $1,300. Mary was also required by the terms of her employment with SLC Incorporated, to conduct business out of her home. The total house expenses for the period February 1 to December 31, 2020 were as follows: Mortgage interest $5,000 Property taxes 2,400 Heat and hydro 1,800 Insurance 650 Minor repairs 500 Mary's office occupies approximately 200 square feet of the total 2,000 square feet of the house. (continued next page...)