Mr. Ned Newell is employed by Snoopy-Snacks Ltd. (a Canadian-controlled private corporation). As of

February 15, 2019, 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 2019 income and expenses. He requests

your assistance in determining his 2019 employment income for tax purposes.

Payroll details:

Gross salary $125,000

Less:

Income taxes $45,000

Canada Pension Plan contributions 2,749

Employment Insurance contributions 860

Registered pension plan contributions defined benefits 6,750

Group income protection premiums paid 120

Group term life insurance premiums paid 180 $55,659

$69,341

Employer-paid amounts and fringe benefits paid by Snoopy-Snacks Ltd.:

Dental plan premiums - paid to Star Insurance Company $245

Group term life insurance premiums 90

B.C. provincial health care premiums 640

Group income protection premiums 400

Monthly allowance to cover travel and automobile expenses

(based on a flat monthly amount of $400 for travel and $400 for auto) 9,600

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 2,800

A birthday gift (a watch) received while in Ontario.

Snoopy-Snack Ltd. Deducted the cost of this gift as a business 150

expense.

Outside financial counselling fees. The counselling firm indicated

that 80% of its fees relate to counselling for future retirement

while the remaining 20% of its fees relate to tax preparation. 2,568

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, 2019. Snoopy-Snacks Ltd. paid Neds rent for a Victoria apartment for the months of

February through April 2019. The rent paid was $1,200 per month.

b) Ned and Snoopy-Snacks Ltd. agreed that he would receive reimbursement from Snoopy-Snacks Ltd. for

one-half of the loss realized by 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, Neds 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 2019, Ned received $2,000 under the terms of this

agreement.

2. Ned had unlimited use of the companys private swimming pool. All management level employees are

permitted to utilize the pool. The local private swimming pool charges annual fees of $1,800 per year (ignore

HST).

3. Ned had the following expenditures during 2019.

Automobile operating expenditures:

Lease payments for 12 months ($850 a month - ignore HST) $10,200

(lease commenced July 1, 2017 were $4,585)

Gasoline and oil 1,300

Insurance 1,050

Maintenance 180

Licence 120

Travelling expenditures:

Meals (consumed while out of metropolitan area for greater than 7,200

12 hours.)

Accommodation 12,000

During 2019, Ned travelled a total of 36,000 kilometres, of which 22,500 kilometres were employment-related.

The manufacturers list price on his automobile was $33,000 (ignore HST).

Required:

(A) Calculate Neds employment income inclusions for 2019 in accordance with the ACT, and the CRAs

administrative position. (30 marks)

(B) Explain why you omitted any of the above amounts from your answer in part (A). (1 mark for each

correctly explained omitted item maximum of 10 marks)