Q2 It is now August 19, 2020. You, CPA, left public practice with a national public accounting firm earlier this month and have just joined Mike Spacey as his chief nancial otftcer. Mike is the President and Chief Operating Officer of two corporations: . Storage Spaces Limited (ESL), a large sail-storage company that operates out of five locations in southem Ontario (Toronto. Mississauga, Brampton, Hamilton, and Niagara Falls) and is registered for GST purposes. The common shares are SSL are owned equally {25%) by Mike {age 55], his wife, Wanda {age 55], and their 23-year old twins, Matt and Mary, who have both just graduated from university. Only Mike works for ESL. - 102 Main Street Ltd. {1.02 MSL), which owns a rental building In Home, Ontario. Mike owns all the shares of 102 MSL. Both corporations have a December 31 year ends. You are at your rst meeting with Mike and he has a number of things that he wants your advice on. Mike says: \"As you know, one of the reasons that I hired you is to help us with the process we go through every year with SSL's annual nancial statements and family personal tax planning. In previous years, our auditors did most of the work, but I hired you because I think we are big enough to have accounting and tax expertise in house. For example, I would like to gure out a way to pay my family dividends like I used to before 2013 but my auditors aren't helping: all I am doing now to save taxes is giving Wanda, Matt and Mary each enough money every year for TFSA contributions. I also don't think that 88L needs an audit. What do you think? SSL is also growing very quickly and I am coming across new issues almost every day. For example, I have just found out that there are empty fuel tanks underneath the parking lot of our Toronto self-storage facility and that these tanks must be properly dismantled to remediate any environmental damage. This is supposed to cost us $300,000 and must be done before we sell the property to anyone else. We don't plan to sell the property anytime soon but are wondering how this is going to affect our nancial statements and tax returns this year." Mike hands you the notice 83L received from the City of Toronto which contains the $300,000 estimate and says: 'In Mississauga, one of our customers drove a truck into the wall of our storage facility and we had to replace it. Unfortunately, our insurance company didn't cover it and we are out of pocket $93,000. Do you think we will be able to deduct this for accounting and tax purposes?" Mike hands you the $93,000 bill to replace the wall in Mississauga and continues: \"In Brampton. I have a site manager who Is threatening to leave unless I provide him with a 560,000 company car or a golf membership. How would that work for tax purposes? We would probably lease the car for about $1,000 a month and put the SSL logo on it. The golf membership would also cost about $12,000. He Is also asking to work out of his home so he can deduct his mortgage Interest1 so I need advice on that too." Millie hands you a quote he received from a car leasing company and gives you some pamphlets he got from an insurance salesman. saying: \"In Hamilton, I have a life insurance person in trying to sell us on life insurance and disability insurance plans as well as drug and dental insurance plans. I'm not sure whether I want to provide these benets to all our fifteen employees orjust me. What do you think? How are these things taxed?' Millie hands you the email he received from a customer in Niagara Falls and says: \"And look at this. One of my Niagara Falls customers is a winery that has banquet facilities This customer has told me that they will give me a $30,000 discount on their rental rate for my son's wedding If SSL gives them free storage for a year. My wife likes the place and so does the bride's family. Is this arrangement going to create any tax problems?\" The phone rings and Millie takes a call. When the call is over. Mitre says he has to run to a meeting, but he also needs your advice on two other things: 102 MSL and his daughter's move to Bermuda. Mike hands you his some notes on 102 MSL (Appendix 1) his daughter's move to Bermuda {Appendix 2).. You agree to write him a report which addresses all his questions as well as any other issues you identify. Appendix 1 - Mike's notes on 102 \"EL 102 MSL is a commotion that owns a rental building in Barrie. Ontario. At the time of my fathers death last year the shares were worth $1.4 million but their paidup capital Is only $100. It only owns one asset: a rental property with land: the land [ACE- $50,000] and the building (ACE $40,000, Class 1 UCC $20,000}. its 2019 tax retlums show that is has no balances in its RDTDH or CDA accounts. I recently received an offer for this rental property. The potential buyer has offered $1.5 million for my shares or $1.3 million it 102 MSL sells the land {which is worm $1.4 million) and building (which is worth $400,000). I don't know whlch offer to take but I want to sell. 102 MSL doesn't appear to make much money each year and I would like to- take the cash and use it to pay for some personal expenses. \"What should I do? Sell assets orshares? And how much will I get after taxes? I need you to do the calculations for me. Are there any G-ST issues? I don't even know it it Is a residential or commercial rental property. All I know is that there are only 6 units, all the leases are for 2 years or more and 1 [12 MSL only has 1 part-time employee.\" Appendix I - "Ike's notes on liary's move to Bermuda My daughter. Mary, and her boyfriend, Ted, are moving to Bermuda at the end of the month to start work with a large reinsurance company in Bermuda. They plan to stay there as long as possible but can only get twoyear work perrnlts but they have done some research which indicates that the permits will likely be renewed as long as they have jobs there. They have already found an apartment there to rent and have signed a two-year lease. They plan to give up their Ontario lIZZlHlP but not their driver's licenses. They will learn to drive on the opposite side of the road in Bermuda but probably get scooters Instead of a car once they get their driver's licenses. . at least fill" the lift\" while. Mary has been living at home until now and will take most of her personal belongs except for her winter clothes and furniture. She will also leave her car in Toronto, but she has signed over the ownership to me. I assume that once she leaves for Bermuda, she will cease to be a resident of Canada. Will she have to le a Canadian tax return in 2020 and report anything? Are there any other issues I should be aware of, etc