Ch. 6 - Employment Income

Question 1

Bonuses

Answer 1

included on a cash basis, unless they are paid more than 3 years after end (in which case it’s included in income in the year it was declared)

Question 2

taxable vs non-taxable benefits - income inclusion for employees

Answer 2

1. taxable benefits are included in employees income

2. non-taxable benefits are not included in employees income

Question 3

taxable vs non-taxable benefits - allowances

Answer 3

generally, allowances are taxable benefits

Question 4

taxable vs non-taxable benefits - discounts

Answer 4

difference between fair value and paid price is taxable

Question 5

taxable vs non-taxable benefits - Gifts and Awards

Answer 5

taxable if:

1. they are non-cash and over $500
2. they are cash or near cash
3. they are given based on performance
4. they are given to non-arms length employees

Question 6

taxable vs non-taxable benefits - Health Care

Answer 6

1. Taxable if premium payments are for public health-care

2. Non-taxable if premium payments are for private health-care

Question 7

Standby charge - employer owns vehicle - calculation

Answer 7

2% x (C x D) where:
C = full original cost including sales tax
D = Days available / 30

Question 8

Standby charge - employer leases vehicle - calculation

Answer 8

2/3 x (E - F) where
E = lease payments for the year including sales tax
F = portion of the lease payments made for loss or damages

Question 9

Standby charge - reduction - when available

Answer 9

reduced if all the following apply:

1. employee is required to use the vehicle for employment duties
2. The vehicle is used primarily (50% or more) for employment purposes
3. personal use kilometers for the year are less than 20,004

Question 10

Standby charge - reduction - calculation

Answer 10

benefit is multiplied by:
(personal use kms) / (1,667 x D) where
D = Total available days where employer owned / leased the vehicle / 30

Question 11

Operating cost benefit - less than 50% employment use

Answer 11

personal kms x prescribed rate

Question 12

Operating cost - more than 50% employment use

Answer 12

lesser of:

1. personal kms x prescribed rate
2. one half of standby charge

Question 13

Employees Loan (not for home)
- calculation

Answer 13

= (prescribed rate for the quarter - interest paid by employee) x amount of the loan outstanding

Question 14

Employees Loan (for homes)
- calculation

Answer 14

= ([lesser of prescribed rate when loan was made and prescribed rate for the quarter] - interest paid by employee) x amount of the loan outstanding

Question 15

Stock Options - Exercise Date

Answer 15

1. Pubco - employement benefit = (FMV on exercise date - exercise price) x # of shares acquired
2. CCPC - No impact

Question 16

Stock Options - Selling Date

Answer 16

1. Pubco - Capital gain = 50% x # of shares sold x (proceeds of disposition - FMV on exercise date)
2. CCPC - Employment benefit = (FMV on exercise date - exercise price x # of shares acquired
3. CCPC - Capital gain = 50% x # of shares sold x (proceeds - FMV on exercise date)

Question 17

Legal expenses

• treatment
• allowable expenses

Answer 17

• Deduction

- expenses incurred to collect remuneration

Question 18

Sales expenses

• Treatment
• Allowable expenses

Answer 18

• Deduction

- advertising promotion, transportation costs, lodging, property tax and insurance on home office

Question 19

Travel expenses

• Treatment
• Allowance expenses

Answer 19

• Deduction

- 50% of meals while away from city for more than 12 hours, airfare, train, bus, lodging

Question 20

Workspace in home

• Treatment
• requirements
• Allowance expenses

Answer 20

• Deduction
• 1. it is the place the person principally (over 50%) performs employment duties, OR
     
     2. both a) it is used exclusively for earning employment income, and b) it is used regularly to meet customers or others for employment purposes
• 1. ordinary employees - Utilities and R&M
     
     2. salespersons - utilities, R&M , insurance, property taxes