Question

Ms. Brenda Fisher has been employed for many years as a computer technician in Vancouver, British Columbia. Her employer is a large publicly traded Canadian company. During 2018, Ms. Brenda Fisher’s gross salary was $250,000. In addition, she was awarded a $50,000 bonus to reflect her exceptional performance in 2018. Ms. Brenda Fisher arranged with her employer that none of this bonus would be paid until 2025.

Other Information:

1. Ms. Brenda Fisher’s employer withheld the following amounts from her income:

2. During the year, Ms. Brenda Fisher was provided with an automobile owned by her employer. The cost of the automobile was $50,000. Ms. Brenda Fisher drove the car a total of 20,000 kilometres during the year, of which only 8,000 kilometres were related to the business of her employer. The automobile was used by Ms. Brenda Fisher for 10 months of the year. During the other 2 months, she was away on personal leave. She was required to leave the automobile with one of the other employees of the company.

3. During the year, the company paid $3,600 to Money Financial Planners for providing counseling services to Ms. Brenda Fisher, with respect to her personal finances.

4. Ms. Brenda Fisher’s employer provided and managed a free day care facility located on the company’s property. The day care facility was used only by the company’s employees. Ms. Brenda Fisher used the company’s day care facility, as she had a 2-year-old son, James, and a 4-year-old daughter, Ashley. Without the company’s day care facility Ms. Brenda Fisher estimated that she would have had to pay an annual minimum of $12,000 per child for daycare.

5. Ms. Brenda Fisher’s employer provided Ms. Brenda Fisher with the following additional benefits:

Personal fitness trainer fees Re Company’s Wellness Centre $1500

Private Health Care Plan - Employer Portion $2000

Takeout Meals Eaten While Working Infrequently Required Overtime $1100

6. Ms. Brenda Fisher’s employer offered all of its employees a 20% discount on full price merchandise in all of its store locations. Ms. Brenda Fisher purchased $ 4,000 worth of merchandise in 2018 and she received discounts totalling $ 800. The merchandise’s discounted price was greater than its cost to the company.

7. Ms. Brenda Fisher’s employer required her to use a larger tablet and portable printer. The company reimbursed her for it and the purchase was the company’s property. As Ms. Brenda Fisher was free to choose whatever tablet and printer that she wanted to use, she purchased the following:

   • An iPad Pro for $1,800 (GST inclusive)

   • A portable printer for $500

   • Ink cartridges for $250

8. The tablet and the printer were used exclusively for company business.

9. In order to assist Ms. Brenda Fisher in purchasing a summer cottage in 2018, the company provided her with a 5-year loan of $300,000. The loan was granted on October 1 at an interest rate of 1%. Ms. Brenda Fisher, on January 20, 2019, paid the company a total of $650 in interest for 2018. Assume that, at the time the loan was granted and throughout the remainder of the year, the relevant prescribed rate was 2%.

10. Ms. Brenda Fisher was required to pay professional dues of $3,300 during the year, which she paid.

11. On July 10, 2018, when Ms. Brenda Fisher exercised her stock option to buy 1000 shares of her employer’s common stock at a price of $15 per share, the shares were trading at $18 per share. When the options were issued, the shares were trading at $12 per share. During December, 2018, the shares were sold for $20 per share.

Required

Calculate Ms. Brenda Fisher’s minimum net employment income for the year ending December 31, 2018. Provide reasons for omitting items that you have not included in your calculations. Ignore GST and PST considerations.

Answer 1

Minimum Net Employment Income of Branda Fisher

Brenda Fisher Minimum Income
Gross Salary	$ 2,50,000.00
Less: Use of Business Car assuming Life of car was 5 Years
Cost of Car $50,0000
Cost per Year $10,000
Cost for 10 Months $8,333
Cost for 8000 KMS out of 20000 KMS	$       3,000.00
Less: Counseling Service	$       3,600.00
Less: Day Care Charges @$12,000 per child	$    24,000.00
Less: Personal Fitness Trainer	$       1,500.00
Less: Private Health Care Plan	$       2,000.00
Less: Interest on Loan	$          650.00
Less: Stock Option Purchased at Discounted Price ( $1000X3)	$       3,000.00
Minimum Net Employment Income of Brenda Fisher	$ 2,12,250.00

Following are Excludued

Bonus : It is for her performance in the Company.

Take out meal was required for the purpose of her overtime in the organisation, hence has been excluded.

Discount for Merchandise is excluded as she has purchased them as per the policy of the organistaion to provide 20 Percent Discount to all the employees.

Professional Dues has been paid by herself hence has been excluded.