Gloin- who is 39 years old - is employed to the Nasty and Crabbit Bank (NCB), an entity duly licensed under the Banking Act, as the manager for Personal Banking Services. Gloin took out two loans as at January 1, 2023 and paid nothing on either loan as at December 31, 2023
One of the loans was in the amount of $3,000,000 @ 5% to purchase fumiture for his home and the second of $3,000,000 @ 10% was used to purchase land. The prescribed rate may be taken as 25%.
Required:
(1) Calculate the taxable benefit, if any, which would arise on this arrangement. Show all calculations and explicitly all assumptions made
(5 marks)
(2) For this requirement, assume that both of the loans were taken out by Gloin to invest in his brother's business. What effect would this have on Gloin's gross emoluments as compared to the arrangement as outlined above?