QUESTION 1: Employment Benefits (11 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. See Exhibit I.

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:

1. Vehicle includes the standby charge and the operating cost benefit. Calculate the amounts if the company:
   1. Purchases the vehicle
   2. Leases the vehicle

2. Shares all tax implications for the current tax year, this includes the Division B & Division C impact (if any).

3. Loans net impact for the current tax year.

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

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 2021. The employer had 2 options either purchase the vehicle for $45,000 (ignore the impact of HST) or lease the vehicle for $750 / month (ignore the impact of HST). The vehicle operating costs for 2021 were $9,200, all of which was paid by the employer. Irene used the vehicle for approximately 11 months in 2021. When she submitted her kilometers to the employer, she calculated that the total kilometers driven was 35,000. Based on her detailed km log, the total personal kilometers were 16,000.

In 2021, the employer also provided Irene with options to purchase shares of the companys common stock. She received 500 shares to purchase ABC Ltd. shares at $44/share. When she received the options, the shares were trading at $31/share. Irene exercised all 500 shares in 2021. At the time of exercise the shares were trading at $54/share. She also sold the shares on December 21 for $65/share.

Irene lived in an apartment until February 2021. At that time she purchased a new house. Under the terms of her employment, she received a $50,000 housing loan on March 1st 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 3%; Q4 2%. Irene paid her December 2021 monthly interest payment on January 10, 2022.