Submit testMs. Mika Lord owns $60\%$ of the outstanding shares of Lord's Luges Ltd$.,$ a CCPC with an August $31$ taxation year$-$end. Ms$.$ Lord's common$-$law partner, Jiang Buff, owns the remaining shares of this company.Lord's Luges has been extremely successful and, as a result, has accumulated over $$3,050,000$ in cash that is not needed in the business. Because of this, the company has a very generous policy with respect to making loans to employees.Under this policy, any employee $($including both shareholders who are also employees$)$ is entitled to:A loan of up to to acquire a principal residence at an interest rate of $\%.$ Loan to be repaid over a $-$year periodin equal annual instalments plus interest. $$180,0002$ fourAn interest$-$free loan of up to to purchase an automobile if used to carry out employment duties. This loan is to berepaid over a maximum of years. $$27,000$fourIn $2023,$ Ms$.$ Lord took advantage of the loan policy as follows.Principal Residence Loan On July $1,,$ Ms$.$ borrowed from the company. The loan will be repaid over a$-$year period in equal instalments of plus interest on January $1$ of each year beginning January $1,.2023$ Lord $$180,000$four $$45,0002024$Automobile Loan On September $1,,$ Ms$.$ borrowed interest$-$free to purchase an automobile she will usein carrying out her employment duties. She is not sure when she will be able to repay this loan. $2023$ Lord $$27,000$In addition to these loans that are available to all of the employees of $\text{'}$s Luges Ltd$.,$ Ms$.$ receives several other loans thatwill be used for various personal expenditures.Lord Lord February $1,2023$: Ms$.$ Lord borrows $$41,000$ at $2\%$ interest. This loan will be repaid on December $1,2025.$ July $1,2023$: Ms$.$ Lord borrows $$27,000$ on an interest$-$free basis. This loan will be repaid on August $30,2024.$ December $10,2023$: Ms$.$ Lord borrows $$49,000$ at $4\%$ interest. It will be repaid on July $1,2025.$All repayments are made as scheduled. Assume the prescribed interest rate is $4\%$ for all years.RequiredWhat are the income tax consequences of receiving each of these loans for the years $2023,2024,$ and $2025?$ Briefly explain your conclusions. Calculate any interest benefit using months instead of days.Describe the income tax consequences of Mika Lord receiving the principal residence loan. Complete the below sentences.As such loans are available to all employees, Ms$.$ Lord can claim that she has received the loan in This means that the loan being included in her income as income from property for $2023$ does not apply to ITA $15(2).$applies to ITA $15(2).$ The rate on the loan is the same as the prescribed interest rate.less than the prescribed interest rate.greater than the prescribed interest rate. There will be an interest benefit that will be included in her income as income from employment $.$ Now, calculate the interest benefit for $2023.($Round your answer to the nearest whole dollar.$)$Loan principal$\backslash$times $($Prescribed interest rate$-$Company interest rate$)\backslash$times Fraction of year$=$Interest benefit, $2023\backslash$times $(-)\backslash$times $=$ Part $3$Now, calculate the interest benefit for $2024.($Round your answer to the nearest whole dollar.$)$Loan balance, $2024\backslash$times $($Prescribed interest rate$-$Company interest rate$)\backslash$times Fraction of year$=$Interest benefit, $2024\backslash$times $(-)\backslash$times $=.$ Describe the income tax consequences of Mika Lord receiving the automotive loan. Complete the below sentences.The motor vehicle exception applies.does not apply. This is because the repayment date is less than one year.less than two years.more than two years.not known. The two$-$year limitation establishes the deadline of August $31,2023.$December $31,2023.$August $31,2024.$December $31,2024.$August $31,2025.$December $31,2025.$ Amounts that are repaid will not be required to be included in income but will be subject to an interest benefit through ITA $80\mathrm{.}4(1)$ as employment income if repaid by August $31,2023.$December $31,2023.$August $31,2024.$December $31,2024.$August $31,2025.$December $31,2025.$ Any amounts repaid after this date will be included in Mika's income as income from property under ITA $15(2)$ in $2023\mathrm{.}2024\mathrm{.}2025.$ Subsequent repayments related to amounts included in her income are eligible for a deduction under ITA $20(1)($j$)$ in the year of repayment.not eligible for a deduction under ITA $20(1)($j$)$ in the year of repayment.Part $6$Describe the income tax consequences of Mika Lord receiving the loan taken out on February $1,2023.$ Complete the below sentences.With respect to Ms$.$ Lord's $2023$ income, the loan must be included.does not have to be included. This is because the loan is repaid prior to August $31,2023.$not repaid prior to August $31,2023.$repaid prior to August $31,2024.$not repaid prior to August $31,2024.$not repaid prior to August $31,2025.$not repaid prior to December $31,2023.$not repaid prior to December $31,2024.$repaid prior to December $31,2023.$repaid prior to December $31,2024.$repaid prior to August $31,2025.$ Ms$.$ Lord is entitled to a deduction under ITA $20(1)($j$)$ from the repayment of $ $41000$ in $2023\mathrm{.}2024\mathrm{.}2025.$ There will be an interest benefit.not be an interest benefit. This is because the loan was not included in her income.included in her income.Part $7$Describe the income tax consequences of Mika Lord receiving the loan taken out on July $1,2023.$ Complete the below sentences.With respect to Ms$.$ Lord's $2023$ income, the loan does not have to be included.has to be included.This is due to the loan not being repaid prior to December $31,2023.$not being repaid prior to August $31,2025.$being repaid prior to December $31,2024.$being repaid prior to December $31,2023.$being repaid prior to August $31,2023.$being repaid prior to August $31,2024.$not being repaid prior to August $31,2023.$not being repaid prior to December $31,2024.$being repaid prior to August $31,2025.$not being repaid prior to August $31,2024.$In this step, calculate the interest benefit for $2023.($Round your answer to the nearest whole dollar.$)$Loan principal$\backslash$times Prescribed interest rate$\backslash$times Fraction of year$=$Interest benefit, $2023\backslash$times $\backslash$times $=$ Part $9$In this step, calculate the interest benefit for $2024.($Round your answer to the nearest whole dollar.$)$Loan principal$\backslash$times Prescribed interest rate$\backslash$times Fraction of year$=$Interest benefit, $2024\backslash$times $\backslash$times $=$ Part $10$Calculate the interest benefit for $2025.($Round your answer to the nearest dollar. For entries with a $$0$ balance, make sure to enter $"0"$ in the appropriate input field.$)$Interest benefit, $2025$ Part $11$Describe the income tax consequences of Mika Lord receiving the loan taken out on December $10,2023.$ Complete the below sentences.With respect to Ms$.$ Lord's $2023$ income, the loan has to be included.does not have to be included. This is because the loan is repaid prior to December $31,2024.$repaid prior to August $31,2025.$not repaid prior to August $31,2023.$repaid prior to August $31,2023.$not repaid prior to August $31,2025.$not repaid prior to August $31,2024.$not repaid prior to December $31,2024.$repaid prior to December $31,2023.$not repaid prior to December $31,2023.$repaid prior to August $31,2024.$Part $12$Calculate the interest benefit for each year. $($For entries with a $$0$ balance, make sure to enter $"0"$ in the appropriate input field.$)$What is the amount of interest benefit for $2023?$ What is the amount of interest benefit for $2024?$ What is the amount of interest benefit for $2025?$