QUESTION 1

Renu Wong is employed by New Green Petroleum(NGP), a CCPC. Mrs.Wong has been employed with this Company since January 1^st. 2019. Her job responsibilities include negotiating contracts on behalf of NGP. In October of 2020, she was relocated to the Companys Vancouver office. She has presented you with the following information for 2020 and has asked you to calculate her taxable income for the year 2020:-

Gross Salary..$100,900

Directors fess. 5,000

Termination pay from a previous employed 10,000

Income protection receipts (Note 2).. 9,000

Payroll Deductions:-

Income taxes withheld$35,000

R.P.P.. 6,000

Canada Pension Plan contributions. 2,719

Employment Insurance contributions 750

Group Income protection premiums (Note 2) 2,000

Group term life insurance premiums 600

Additional Information:-

1. NGP provided Mrs, Wong with a leased vehicle to be used in business. Details relating to the leased vehicle are as follows:-

Lease cost including $1,500 of HST and insurance$13,500

Operating cost paid by the Company. 5,000

Total kilometres travelled....20,000

Kilometres travelled for personal use . 8,000

Amount re-imbursed to the Company. 2,000

3. The Company paid 50% of the premiums to the insurance company re the income protection plan payments. During 2020, Mrs. Wong received $9,000 in periodic payments in respect of an eight week illness. Her accumulated payments to the income protection plan to date was $6,000.

4. On July 1^st. 2020, the Company offered all employees the right to purchase stocks of the Company under a stock option plan at a price of $25 per share. Fair market value of the shares at this time was $26 per share. On September 1^st. 2020, Mrs. Wong exercise her option and bought 2,000 of these shares. The fair market value of these shares on this date was $28 per share. On November 1^st. Mrs. Wong sold 500 of these shares at $30/share so she could have sufficient funds to have a holiday in Rome.

5. Although Mrs. Wong started working for NGP on January 1^st. 2019, her family did not come to Toronto until February 2020. The Company paid all their moving costs of $12,000, and the actual loss on the sale of her home of $25,000. She also received a travel allowance of $5,000. The actual moving costs incurred included air-tickets of $2,400, moving van $5,000 and storage costs of $1,000.

6. Mrs. Wong obtained a loan of $150,000 from NGP on July 1^st. 2020 to acquire a new home in Toronto. The loan bears interest at 2% (fair market value of interest rates in 2020 were:-1^st. Qtr. 4%; 2^nd. Qtr. 3%; 3^rd. Qtr. 1%; 4^th. Qtr. 3%)

7. Mrs. Wong has the other following sources of income:-

Dividends from Y Ltd. (CCPC)$1,200

Dividends from Rogers, Cda 720

Dividends from Amazon, USA.. 8,500

Interest on Canada Savings bonds 1,000

She paid an investment counsellor $1,200 to manage her investments in 2020 and $60

For a safety deposit box.

8. In 2020, she sold 1,000 shares IBM for $50,000. She had purchased the shares in 2017 at $35 per share. Selling cost involved in selling the shares was $300.

9. The Wongs had owned a home and a cottage in Halifax where they had originally lived.. They sold the cottage in 2018 giving the cottage the maximum designation as a principal residence. The cost of the cottage was $300,000 and it was purchased in 2013. They sold the cottage for $420,000. When they moved to Toronto in 2020, they sold the house which they had bought for $200,000 in 2012 for $360,000. Real estate commission for selling the cottage was $2,000 and for the house $7,000.

10. Mrs. Wong contributed $9,000 in 2020 to her RRSP. Her earned income in 2019 was $95,000. The employer had reported a pension adjustment for 2019 of $5,000 and she had unused deduction room of $10,000.

11. She had a non capital loss of previous years of $4,000.

Required:-Calculate Mrs. Wongs 2020 taxable income under Division B. Show all calculations.

NOTE:-Organize your work following S3:-

3(a)

+3(b)

-3

-3(d)

NET INCOME

Less Non-Capital Loss

EQUAL: TAXABLE INCOME.