Jasleen, vice-president of manufacturing at BT Vending Inc. (BTVI), met with you to discuss some issues related to her 2018 taxation year. She asked you to explain the tax implications of certain amounts and benefits she received from her employer during the year. You agreed to review the material she provided and to meet with her tomorrow to explain the tax treatment to her. Jasleen has provided the following information: Salary, gross $ 90,000 Payroll deductions: Income taxes $29,000 Canada Pension Plan premiums 2,594 Employment Insurance premiums 858 Group accident disability insurance premiums 200 (32,652) Net pay $ 57,348 Jasleen is also on the Board of Directors for BTVI and received fees of $1,500 from the company for this role. Jasleen exercised a stock option to acquire 600 shares of BTVI at $20 per share. The fair market value was $19 per share when the options were granted in May 2015 and $22 per share when exercised in June 2018. In 2018, Jasleen was also granted an option to purchase an additional 800 shares with a fair market value of $22 per share and an exercise price of $21 per share at the time the option was granted. BTVI is listed on the Toronto Stock Exchange. Jasleen received a birthday gift of $80 cash from BTVI. Jasleen and her husband were provided with the companys condo in Florida for one month during the winter. Such accommodation during this peak period would have cost them $4,000, as opposed to the $1,500 they actually paid to BTVI. Jasleen was not engaged in any business activities while on vacation. BTVI also paid for a trip Jasleen and her husband took to the Bahamas, the main purpose of which was for Jasleen to work with a customer. They did not extend their trip to include a vacation. BTVI paid Jasleens expenditures of $4,000, which were reasonable in relation to the business function. BTVI paid travelling expenses of $2,000 for Jasleens husband, who did not meet with customers. In 2018, BTVI paid $530 for Jasleen to have her income tax return prepared by the companys accountants. BTVI provided Jasleen with a car, which it purchased on July 7, 2018. York CE Tax Principles Quiz 2 Page 3 of 5 Capital cost of the car including GST $ 47,460 Capital cost allowance claimed by BTVI for 2018 $ 4,500 Operating costs paid by BTVI $ 4,000 Kilometres per Jasleens kilometre log: Business use 12,000 Personal use 8,000 Amount reimbursed by Jasleen in January 2019 to BTVI for personal use [operating costs at $0.15 per km (8,000 km $0.15)] $ 1,200 In August, Jasleen was in an accident and was unable to work for eight weeks. During this period, she received disability payments totalling $9,000 from Comprehensive Insurance Ltd. Jasleen has paid all of the disability insurance premiums personally. Jasleen moved from the Ontario office of BTVI to its Toronto office during 2018, at the request of BTVI. To entice Jasleen to move, BTVI provided her with an interest-free loan of $100,000 to buy a house in Toronto. The terms of the loan require Jasleen to repay $10,000 annually on January 30 each year, with payments starting in January 2019. BTVI advanced Jasleen the funds on September 1, 2018. BTVI paid Jasleen an allowance of $12,000 to cover the cost of her move to Toronto plus a $32,000 payment in respect of a loss on the sale of her Ontario home. Jasleens newly acquired home in Toronto required some minor repairs; as a result, BTVI provided her with a companyowned apartment. Jasleen stayed in the apartment for 10 days for $200. Similar units in the same building rent for $900 per month. BTVI gave all its employees Christmas gifts that cost the company $60 per employee. The company installed recreational facilities at its Toronto office. All employees are permitted to use these facilities free of charge. The equivalent value for similar facilities at a private club would be $1,000 per year. Assume that the prescribed interest rate for 2018 was 1% for the first three quarters of the year and 2% for the last quarter of the year. Required: Explain the tax treatment of the amounts and benefits Jasleen received from her employer during the year. Determine Jasleens net and taxable income for 2018. Ignore the effect of any leap year. A good approach to this question is to list all the items included in the question and then use a system such as the following to identify the tax status of each item: I = Include in employment income. NI = Do not include in employment income. York CE Tax Principles Quiz 2 Page 4 of 5 D = Deduction is available. ND = Expenditure is made, but no deduction is available. Once youve completed this process, calculate the amounts to be included in income, or to be deducted for the items youve identified. Always remember to provide an explanation for any amounts that you have excluded from your calculations.