Question

#7) (8 Marks) As a Salesperson, you are attempting to determine the maximum amount of expenses you are entitled to claim for the tax year. Given the following, compute the maximum total employment expenses the taxpayer may claim: Income: Salary Income for the Year Sales Commission Income for the Year $25,000 $6,000 Expenses: Motor Vehicle Operating costs (Gas, R+M, Insurance, etc.) CCA on Personal Vehicle used for work purposes Hotel Costs travelling for Work Advertising Expenses Depreciation on tables and chairs owned by taxpayer and used for work Actual Meal Costs while travelling for work Office Supplies used for work purposes Home Office: Utilities Home Office: Property Taxes Home Office: House Insurance Personal Residence: Remodeling Master Bathroom $4,200 $2,200 $1,000 $600 $350 $500 $50 $525 $450 $180 $6,000 Note #1: The above expenses marked with an * have already been adjusted to back out any personal amount and the figure presented is the employment use amount. Note #2: Assume the above expenses were required as a condition of employment and no reimbursement or allowances were received from the employer.

Answer 1

Particulars Working note Amount Gross salary 1 85000 2 Exempt Employer contribution to recognise provident fund to pension plan Employer contribution to 700 dental plan Employer contribution to life 250 insurance plan Car facility provided by 5 5400 employer Expenses of Rodger paid by G 3200 employer Gift from employer 7 Exempt Club membership fess paid 1500 by employer Bouns received 6000 Medical expenses borne by 10 Exempt employer Total salary 102050 Under income tax act. Gross salary is taxable.,not net salary 2 Employer contribution to recognise provident fund is taxable if contribution is greater than 12%of basic salary in that Basic salary is 85000 and 12%of 85000 is 10200 and actual expenses is 3500.. that's why it's fully exempt.. 3. Employer contribution to dental plan is fully taxable 4. Employer contribution to life insurance plan is fully taxable 5. Car facility provided by employer than taxable.. 1800 per month (assume car capacity is up to 1.8 cc) So 1800'3 months 5400 6.proparation of Rodgers expenses paid by employer is taxable 7. Gift upto 5000 is fully exempt in hand of employees 8 club membership fessis taxable

9 bouns received in part of salary 10 medical expenses borne by employer of employees is fully exempt

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