Ms. owns 60% of the outstanding shares of 's Luges Ltd., a CCPC with an August 31 taxation year end. The remaining shares of this company are owned by Ms. 's common-law partner, . 's Luges has been extremely successful and, as a result, has accumulated over in cash that is not needed in the business. Because of this, the company has a very generous policy with respect to making loans to employees. View the loan policy.LOADING... Required What are the income tax consequences of receiving each of these loans for the years , , and ? Briefly explain your conclusions. Calculate any interest benefit using months instead of days.

Under this policy, any employee (including both shareholders who are also employees) is entitled to:

A loan of up to

$215,000

to acquire a principal residence at an interest rate of

2%.

Loan to be repaid over a

5-year

period in equal annual instalments plus interest.

An interest-free loan of up to

$29,000

to purchase an automobile if used to carry out employment duties. This loan is to be repaid over a maximum of

4

years.

In

2022,

Ms.

Lawson

took advantage of the loan policy as follows:

Principal Residence Loan On July 1,

2022,

Ms.

Lawson

borrowed

$215,000

from the company. The loan will be repaid over a

five-year

period in equal instalments of

$43,000

plus interest on January 1 of each year beginning January 1,

2023.

Automobile Loan On September 1,

2022,

Ms.

Lawson

borrowed

$29,000

interest-free to purchase an automobile she will use in carrying out her employment duties. She is not sure when she will be able to repay this loan.

In addition to these loans that are available to all of the employees of

Lawson's

Luges Ltd., Ms.

Lawson

receives several other loans that will be used for various personal expenditures:

February 1,

2022:

Ms.

Lawson

borrows

$35,000

at

2%

interest. This loan will be repaid on December 1,

2024.

July 1,

2022:

Ms.

Lawson

borrows

$29,000

on an interest-free basis. This loan will be repaid on August 30,

2023.

December 10,

2022:

Ms.

Lawson

borrows

$43,000

at

3%

interest. It will be repaid on July 1,

2024.

All repayments are made as scheduled. Assume the prescribed interest rate is

3%

for all years.

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