QUESTION 1: Chapter 3 (12 marks)

You just had a meeting with your new personal taxation client, Irene. She has provided you with lots of tax information and supporting backup to complete her tax return.

Irene is interested in the tax impact of various transactions. Please review the information provided in the exhibit and determine the taxable benefit for Irene for the following items:

a) Vehicle includes the standby charge and the operating cost benefit.

b) Shares all tax implications for the current tax year.

c) Loans net impact for the current tax year.

You MUST show your detailed calculations in your excel. NOT copy and paste from a past excel.

Answer that look like they were copied from a previous excel solution will not be marked and will be awarded a 0.

Exhibit I

Irene is working in Company ABC Ltd, a public corporation. The employer provided her with a vehicle to use for employment purposes for 2020. The employer had 2 options either purchase the vehicle for $35,000 (ignore the impact of HST) or lease the vehicle for $500 / month (ignore the impact of HST). The employer decided to purchase the vehicle at the end of 2019. The vehicle operating costs for 2020 were $5,200, all of which was paid by the employer. Irene used the vehicle for approximately 9 months in 2020. When she submitted her kilometers to the employer, she calculated that the total kilometers driven was 34,000. Based on her detailed km log, the total personal kilometers were 10,500.

In 2020, the employer also provided Irene with options to purchase shares of the companys common stock. She received 150 shares to purchase ABC Ltd. shares at $34/share. When she received the options the shares were trading at $27/share. Irene exercised all 150 shares in 2020. At the time of exercise the shares were trading at $44/share. She also sold the shares on December 21 for $50/share.

Irene lived in an apartment until June 2020. At that time she purchased a new house. Under the terms of her employment, she received a $60,000 housing loan on June 15th at a stated interest rate of 2%. She pays interest on the loan monthly. The prescribed interest rates for this type of transaction are the following: Q1 4%; Q2 5%; Q3 4%; Q4 6%. Irene paid her December 2020 monthly interest payment on January 10, 2021.

QUESTION 2: Chapter 3 (13 marks)

You had your second meeting with another new personal taxation client, Poonam. She has provided you with some information about her and her husbands tax situation. See exhibit II. Poonam would like to know about what employment expense deductions she and her husband are eligible for:

a) Poonam - her eligibility for home office expenses and the total employment expense deduction for 2020. She is also interested to know whether she can carry forward any home office expenses and under what circumstances.

b) Poonams husband Mark his available deduction if he selects section 8(1)(h) & (h.1). Mark would like to know if he qualifies to deduct under section 8(1)(f) and how his deduction may differ if he chooses that approach instead.

You MUST show your detailed calculations in your excel. NOT copy and paste from a past excel.

Answer that look like they were copied from a previous excel solution will not be marked and will be awarded a 0.