On August 1 of the current year, Kates employer Shop Inc. provided him a vehicle. For Shop Inc. to purchase the vehicle it would cost $45,000 including all applicable taxes. Whereas leasing the vehicle would cost Shop Inc. $750 a month. In either case, Shop Inc. would pay all operating costs for the vehicle, which is expected to be $2,250 yearly. Kates estimates that he will drive 2,100 monthly, of which 300 km will be for employment.

a) Determine the amount to be included in Kate's employment inform for the current year if i)

Shop Inc. purchases the car and ii) if Shop Inc. leases the car.

b) Kate drives the car for 16,000 km for employment purposes and 6,000 for personal use in the following year. Determine the amount to be included in his personal taxes assuming Shop Inc. leases the vehicle

Vehicle formulas

Operating expense benefit= prescribed rate (28 cents) X Personal KMS

Standby charge= Original cost of vehicle X 2% X # months available

Standby Charge = Monthly lease cost x 2/3 X 8 months available

Reduce Standby charge= (Personal km driven/1,667 km per month) X standby charge