Folio S2-F Problem 23 Author's note: Chapter 21, problem s addresses the HST Rebate implications for this problem. The GST/HST solution may be used in conjunction with the solution for this problem or as a separate assignment. Mr. Ned Newell is employed by Snoopy-Snacks Ltd. (a Canadian-controlled private corporation). As of February 15, 2021, Ned was promoted to vice-president sales due to his hard work negotiating puppy snack contracts on behalf of the company. This promotion required Ned to relocate from the Toronto office of Snoopy-Snacks Ltd. to its Victoria, British Columbia office. Ned has provided you with the following information regarding his 2021 income and expenses. He requests your assistance in determining his 2021 employment income for tax purposes. $125,000 Payroll details: Gross salary Less: Income taxes Canada Pension Plan contributions Employment Insurance contributions Registered pension plan contributions: defined benefit Group income protection premiums paid Group term life insurance premiums paid $45,000 2,749 860 6.750 120 180 55,659 $ 69,341 $ 245 90 640 400 9,600 Employer-paid amounts and fringe benefits paid by Snoopy-Snacks Ltd.: Dental plan premiums - paid to Star Insurance Company .. Group term life insurance premiums B.C. provincial health care premiums Group income protection premiums Monthly allowance to cover travel and automobile expenses (based on a flat monthly amount of $400 for travel and $400 for auto) ..... Travelling expenses for Ned and his wife to Bermuda for a sales conference. Ned's time was spent attending the conference but his wife was on vacation the entire time. No HST was payable on the trip since it was outside of Canada. One-half of the expenses related to Ned and one-half to his wife...... A birthday gift (a watch) received while in Ontario (including HST). Snoopy-Snacks Ltd. deducted the cost of this gift as a business expense... Outside financial counselling fees (including HST). The counsel- ling firm indicated that 80% of its fees relate to counselling for future retirement while the remaining 20% of its fees relate to tax preparation 2,800 150 2,568 Other Information: 1. Snoopy-Snacks Ltd. provided Ned with some assistance that relates to his move from Toronto to Victoria. The details of that assistance are set out below. a) Ned purchased a new home in Victoria just prior to his move. However, he could not take possession of that home until April 30, 2021. Snoopy-Snacks Ltd. paid Ned's rent for a Victoria apartment for the months of February through April 2021. The rent paid was $1,200 per month. 62 b) Ned and Snoopy-Snacks Ltd agreed that he would receive reimbursement from Snoopy-Snacks Ltd. for one-half of the loss realized by him on the sale of his Toronto home. Ned received $16,500 as a result of this agreement. c) Ned received an allowance of $15,000 to cover his moving expenses. In addition to the above, Ned's employer agreed to reimburse him an amount equal to one-quarter of his annual mortgage interest payment for the first five years of his mortgage on his new Victoria home. This was intended to compensate for higher real estate prices in Victoria. For 2021, Ned received $2,000 under the terms of this agreement. 2. Ned had unlimited use of the company's private swimming pool. All management level employees are permitted to utilize this pool. The local private swimming pool charges annual fees of $1,800 per year before HST. 3. Ned had the following expenditures during 2021. $10,200 Automobile operating expenditures: Lease payments for 12 months ($850 a month including HST of 12%) (lease commenced July 1, 2019 for a period of three years, deducted lease costs for 2019 were $4,585) Gasoline and oil Insurance Maintenance 1,300 1,050 180 120 Licence .... Travelling expenditures: Meals (consumed while out of metropolitan area for greater than 12 hours) Accommodation. 7,200 12,000 During 2021, Ned travelled a total of 36,000 kilometres, of which 22,500 kilometres were employ- ment-related. The manufacturer's list price on his automobile was $33,000 before HST. Ned would like you to calculate his employment income for tax purposes for 2020, cross-reference your answer to the appropriate sections of the Act and/or Income Tax Folios, and for your files you should indicate why you did not include any of the above amounts in your answer with the appropriate cross-reference. Folio S2-F Problem 23 Author's note: Chapter 21, problem s addresses the HST Rebate implications for this problem. The GST/HST solution may be used in conjunction with the solution for this problem or as a separate assignment. Mr. Ned Newell is employed by Snoopy-Snacks Ltd. (a Canadian-controlled private corporation). As of February 15, 2021, Ned was promoted to vice-president sales due to his hard work negotiating puppy snack contracts on behalf of the company. This promotion required Ned to relocate from the Toronto office of Snoopy-Snacks Ltd. to its Victoria, British Columbia office. Ned has provided you with the following information regarding his 2021 income and expenses. He requests your assistance in determining his 2021 employment income for tax purposes. $125,000 Payroll details: Gross salary Less: Income taxes Canada Pension Plan contributions Employment Insurance contributions Registered pension plan contributions: defined benefit Group income protection premiums paid Group term life insurance premiums paid $45,000 2,749 860 6.750 120 180 55,659 $ 69,341 $ 245 90 640 400 9,600 Employer-paid amounts and fringe benefits paid by Snoopy-Snacks Ltd.: Dental plan premiums - paid to Star Insurance Company .. Group term life insurance premiums B.C. provincial health care premiums Group income protection premiums Monthly allowance to cover travel and automobile expenses (based on a flat monthly amount of $400 for travel and $400 for auto) ..... Travelling expenses for Ned and his wife to Bermuda for a sales conference. Ned's time was spent attending the conference but his wife was on vacation the entire time. No HST was payable on the trip since it was outside of Canada. One-half of the expenses related to Ned and one-half to his wife...... A birthday gift (a watch) received while in Ontario (including HST). Snoopy-Snacks Ltd. deducted the cost of this gift as a business expense... Outside financial counselling fees (including HST). The counsel- ling firm indicated that 80% of its fees relate to counselling for future retirement while the remaining 20% of its fees relate to tax preparation 2,800 150 2,568 Other Information: 1. Snoopy-Snacks Ltd. provided Ned with some assistance that relates to his move from Toronto to Victoria. The details of that assistance are set out below. a) Ned purchased a new home in Victoria just prior to his move. However, he could not take possession of that home until April 30, 2021. Snoopy-Snacks Ltd. paid Ned's rent for a Victoria apartment for the months of February through April 2021. The rent paid was $1,200 per month. 62 b) Ned and Snoopy-Snacks Ltd agreed that he would receive reimbursement from Snoopy-Snacks Ltd. for one-half of the loss realized by him on the sale of his Toronto home. Ned received $16,500 as a result of this agreement. c) Ned received an allowance of $15,000 to cover his moving expenses. In addition to the above, Ned's employer agreed to reimburse him an amount equal to one-quarter of his annual mortgage interest payment for the first five years of his mortgage on his new Victoria home. This was intended to compensate for higher real estate prices in Victoria. For 2021, Ned received $2,000 under the terms of this agreement. 2. Ned had unlimited use of the company's private swimming pool. All management level employees are permitted to utilize this pool. The local private swimming pool charges annual fees of $1,800 per year before HST. 3. Ned had the following expenditures during 2021. $10,200 Automobile operating expenditures: Lease payments for 12 months ($850 a month including HST of 12%) (lease commenced July 1, 2019 for a period of three years, deducted lease costs for 2019 were $4,585) Gasoline and oil Insurance Maintenance 1,300 1,050 180 120 Licence .... Travelling expenditures: Meals (consumed while out of metropolitan area for greater than 12 hours) Accommodation. 7,200 12,000 During 2021, Ned travelled a total of 36,000 kilometres, of which 22,500 kilometres were employ- ment-related. The manufacturer's list price on his automobile was $33,000 before HST. Ned would like you to calculate his employment income for tax purposes for 2020, cross-reference your answer to the appropriate sections of the Act and/or Income Tax Folios, and for your files you should indicate why you did not include any of the above amounts in your answer with the appropriate cross-reference