Question

Ms. Susan Snow is a linguist, specializing in Asian languages. As the daughter of a Canadian diplomat, she has become familiar with the many customs and practices found throughout Asia. In 2019, a headhunting firm in B.C. connected her with Golden Mountain Experiences (GME), a public company, which had begun operations in Whistler, B.C. GME had need of a representative to promote their Canadian services to Asian tour operators and executives.

 

When GME offered her a position in November, 2019 with a start date of January 1, 2020, she immediately accepted.

 

Other Information:

Other information relevant to 2020 is as follows:

 

1. GME owned a suite hotel and offered her the use of a unit there at a rate of $2,000 per month. The regular monthly rate for the unit was $5,000 per month. She moved in on January 1, 2020. Through contacts, she finds a large townhouse in Whistler that she purchases on May 15, 2020 for $1,600,000. After doing extensive renovations, she moves out of the hotel and into her townhouse on July 1, 2020.

 

2. In order to help Susan with the purchase of her new townhouse, GME provided her with a $100,000 interest free housing loan. The funds are provided to Susan on May 1, 2020. Assume that the prescribed rate for all of 2020 is 2 percent.

 

3. During 2020, Susan earned a salary of $175,000. This included several large bonuses due to her exceptional sales ability. The Company withheld the following amounts from her salary:

 

      Income Taxes                                                       $53,000

      CPP                                                                          2,898

      EI                                                                                 856

      RPP Contributions                                                   2,500

      Payment For Personal Use Of Automobile             1,200

 

4. GME contributed $2,500 on Susan’s behalf to the Company’s RPP.

 

5. GME provides group medical coverage to all of its employees. The private health plan premiums paid by GME on Susan’s behalf cost $1,115 for the year.

 

6. During the year, Susan received two non-cash gifts from GME, a season ski pass worth $1,000 and a Christmas gift certificate redeemable at many restaurants in Whistler Village for $100.

 

7. Her favourite uncle visited her and went skiing with a day pass that Susan provided. He died after falling and hitting his head on a boulder while skiing out of bounds. GME provided Susan with grief counseling services worth $665. She considered the counsellor incompetent and the sessions useless.

 

8. Up until her uncle's death, Susan purchased many day passes at Whistler for friends and families using GME's 15 percent corporate discount. A statement from GME stated that Susan had saved a total of $1,050 using the discount in 2020.

 

9. Susan was granted options to buy 100 of the company's shares at $100 per share when she joined the staff of GME. At that time, the shares were trading at $94 per share. On May 10, 2020, the shares are trading at $123 per share. She acquires 50 shares for cash of $5,000 on that date. She is still holding these shares on December 31.

 

10. GME provided Susan with a membership in the exclusive Blackcomb Ski Club And Spa. The cost of the annual membership was $5,000. Susan took her clients there for meals and drinks. GME paid all the charges on her account as they were related to potential clients of GME. For 2020, this amounted to $22,200.

 

11. GME provides Susan with a luxury vehicle that she uses to drive her clients on tours and to and from the airport. It was purchased in late 2019 for $120,000, including GST and PST. The vehicle was used by Susan throughout 2020. During the year, she drove the vehicle a total of 102,000 kilometers, of which 90,000 were related to her employment duties. GME pays all operating and maintenance costs, a total of $23,000 during the year. GME withheld $1,200 from her December salary to pay for her personal use of the vehicle for 2020.

 

12. Susan’s demanding job requires her to meet with clients at all hours of the day and night because many of them are on international flights. GME will provide her with a signed form T2200 stating that she is required to pay for certain employment expenses without reimbursement and use a portion of her home for work.

 

Susan has renovated in order to have a separate area in her townhouse to be used exclusively to entertain her clients, in addition to signing the contracts. She has no receipts for the renovations she did. She was unable to find a contractor who would invoice and accept cheques. Since she needed the work finished quickly, Susan reluctantly paid cash. She used this work space between July 1 and December 31, 2020. This work space occupied 600 square feet of the 2,222 square feet available in her townhouse.

 

Work space related expenditures are as follows:

      Monthly Maintenance Fee (For 6 Months)                             $5,400

      Hydro (For 6 Months)                                                                  450

      Property Insurance (6 Months)                                                    575

      Property Tax (6 months)                                                           2,600

      Big screen TV used solely for the entertainment of clients

            (promotional videos, ski races, etc.)                                   2,600

      Office Furniture                                                                        5,600

      Furniture for client's entertainment area                                12,400

 

13. Susan received an allowance of $400 per month for 6 months to cover the costs of maintaining a workspace in her home.