Each of the following two situations is independent. 1. Gloria is a shareholder and key employee of IBM Ltd., a CCPC with a September30th, fiscal year end. Glorias daughter, age 19, a full-time student at theUniversity of Toronto, received an interest-free loan of $20,000 from IBM Ltd. onDecember 31, 2020 to pay her tuition. The loan is repayable in full in 2023, oneyear after she graduates. 2. Barry Smith is a 60% shareholder and president of Smart Ltd., a Canadian-controlled private corporation with September 30th year end. On March 1, 2021,Barry received a $600,000 loan from Smart Ltd. to assist him with the purchase ofa new home, located 10 km from his previous home. The loan is repayable overfive years in equal instalments of principal payable on the anniversary date. Theloan has an interest rate of 1% per annum. The interest is payable monthly. It wasdetermined that Barry received his loan by virtue of being an employee.

Required: What are the tax implications for the individual receiving the loans? Assume theprescribed rates of interest were as follows:

2021 2022 2023 Jan Mar 3% 5% 6%

Apr June 3% 5% 6%

July Sept 4% 5% 6%

Oct Dec 4% 5% 6%

What are the tax implications for the individual receiving the loans?

If calculations are required, do not do anycalculation beyond December 31, 2023.