Question

ssignment Problem Three - 10 Employment Income) Braxton has worked for AAAA Retailers for a number of years. AAAA is a Canadian Ted private corporation. It operates three children's clothing stores in the Edmonton Ms. Alexa Braxi controlled priv area. Her salary for the earnings: lary for the year 2019 was $120,000. AAAA withheld the following amounts from her Federal And Provincial Income Tax El Premiums $20,400 CPP Contributions 860 Private Health Care Plan - Employee Portion 2,749 Union Dues 100 Other Information: AAAA provided Alexa with a car to be used in her employment activities. In addition, the Company paid her 2019 operating costs of $10,250. The car was purchased, used, from a car dealer for $33,600, including GST of $1,600. The car was available to Alexa throughout 2019. During this period, she drove a total of 81,000 kilometers, 6,000 of which were for personal use. Alexa earned the outstanding employee award for 2019. Besides a plaque, the award came with a cheque for $2,000 payable in January, 2020.

Answer 1

Salary	$1,20,000
Federal And Provincial Income Tax	$0
EI Premiums	$0
CPP Contributions	$0
Union Dues	-$100
Private Health Care Plan - Employee Portion - Item 6	$0
Car Benefit - Item 1	$3,629
Cash Award - Item 2	$0
Stock Option Benefit - Item 3	$13,000
Child Care Benefit - Item 4	$0
Discounts On Merchandise - Item 5	$0
Takeout Meals Eaten While Working Overtime - Item 6	$0
Private Health Care Plan - Employer Portion - Item 6	$0
Personal Fitness Trainer Fees - Item 6	$700
Computer Related Supplies - Item 7	-$550
Net Employment Income	$1,36,679

Item 1: The taxable benefit on the car would be calculated as follows:

Standby Charge [2% * $33,600 * 12 * (6,000 / 20,004*)]	$2,419
Operating Cost Benefit - Lesser Of:
[($0.26) * (6,000)] = $1,560
[(1/2) * ($2,419)] = $1,210	$1,210
Total Benefit	$3,629

* [(12) * (1,667)]

Item 2: Employment income is determined on cash basis. Hence $2,000 will be employment income in 2019.

Item 3: There is no inclusion of income resulting from the exercise of the CCPC stock options. Income of $13,000 [(1,000 * ($48 - $35)] is included when the shares are sold. There will also be a deduction of $6,500 [(1/2) * ($13,000)] while calculating taxable income. But there is no affect on calculation of net employment income.

Item 4: Child care provided by an employer, at his place of business, and is not available to the general public, it is not considered to be a taxable benefit.

Item 5: If an employer generally provides discounts, it is not considered a taxable benefit. However, it must be available to all employees and the discounted price cannot be below cost.

Item 6:

• Reimbursement or directly paying for meals when employees work overtime is not a taxable benefit.
• Payment of premiums by employer for private health care is not a taxable benefit. The employee’s share is considered as medical costs and is eligible for credit against Tax Payable. However, this does not affect the calculation of net employment income.
• Mental or physical health counseling is not a taxable benefit, but payment to a personal fitness trainer is.

Item 7: iPad has no effect on income as it is owned by AAAA. Alexa has no personal use of the iPad. Thus there is no taxable benefit. Alexa owns the printer. She cannot deduct CCA (tax depreciation) on its capital cost. However, she can deduct the cost of cartridges and supplies.