Chapter 3 Flashcards
On NITP calculations when are you totaling and when are you subtotaling?
Totals go after Positive sources (EI, + Business income, +/- property, interest income, other income. And then you total again after capital gains + losses. And then you total again after deductions and then you total again after negative sources.
What is a standby charge?
When an employer provides an employee a vehicle, the employee benefits from having the vehicle for personal use
Who pays the operating costs for a vehicle the employer lets employee use?
The employer will often pay all the operating costs of the vehicle, which will then include costs for personal use (operating cost benefit)
The employee may reimburse the employer which can be subtracted from the automobile benefits on the employment income
What is the standby charge for an employer-owned vehicle vs Employer leased vehicle?
Employer-owned vehicle:
2% x Cost of Car x Months Available
Employer leased vehicle:
2/3 x Monthly Lease Payment x Months Available
(Lease payment should exclude operating costs such as insurance)
However, if the vehicle is used primarily for work (more than 50%), the standby charge can be reduced by the following formula
1,667 km per month x # months available
How do we determine operating costs benefit when lending a vehicle to employees?
We use KM driven * 0.29 which is the standard rate BUT if the vehicle is mainly driven for work. Then we do a second calculation which is the standby charge * 50%. Whatever is LOWER OF between the two is what is used for the Operating benefit
How is a taxable benefit for stock options calculated?
It is calculated by FMV of shares - purchase price * shares excercised
What is the difference between how calculations are done for private companies vs public companies for stock options
For public companies the taxable benefit is calculated in the year the shares are EXCERCISED, for a private company the taxable benefit is calculated in the year the shares are sold
When is the Primary Beneficiary not taxed?
If used more than 50% for work, it is not taxed, if less than 50% it is 100% taxable
When are employee loans not taxed?
If the employee loan rate is higher than the prescribed rate, there is no taxable benefit
When are loyalty points not taxed?
When they are not cash or able to be converted to cash
When are board and lodging not taxed?
They are not taxed when the work site is entirely remote with no accommodation (wilderness)
They are not taxed when the work site has no reasonable commute to a private accommodation ( Highway worker 3 hours from home)
When are gifts not taxed?
Gifts are not taxed when they are under $500. Multiple gifts can be combined but as long as they are under $500 they are not taxed.
If gifts are above $500 in value, only the excess amount is taxable.
If gifts are “near cash”, such as gift cards or gift certificates are 100% taxable, no matter what the value is.
When are long service awards not taxed?
Long time service awards will not be taxed if awarded once every 5 years.
When are recreational memberships/fitness facilities not taxed?
They are not taxed if all employees are given it. It is taxed if certain employees are given access while others are not.
When is parking not taxed?
Not taxable if you will be coming and going from the office and therefore need to ensure if a place needs to be available
When are courses and course-related costs not taxable?
Not taxable if work is the primary benefit of employee taking the course
When is group disability not taxed?
If an employer pays premiums, premiums are not taxable but group disability benefits will be taxable.
If the employee pays premiums, premiums are NOT deductible, but group disability benefits will NOT be taxable
Allowances: What is the taxable allowance for salesperson/Employee travel costs?
When the employee/sales person receives reasonable travel allowance, ($20,000 allowance compared to $19,000 in costs), The allowance is not taxable and the costs are not deductible
What is a prescribed loan ?
When an employer makes a loan to an employee that is either interest free or has a rate below the going market rate, the employee has received an economic advantage therefore a employee benefit.
If the market rate is higher than the employer rate, no benefit exists.
If the loan is to allow an employee to purchase a house, the rate used to determine the benefit is the lower of the prescribed rate at inception or the current rate
What is an example of prescribed loan?
It is calculated using the formula
(Prescribed rate X loan balance X # of months outstanding / 12) less actual interest paid)
How does Employer/Employee RPP deductions work?
They are deducted from taxable income if payments are made by employee, and they are not included in taxable income if paid by Employer.
Employee POV = Deductible
Employer POV = Not Taxable
How does Employer/Employee Life insurance premium work?
Employee POV = Not deductible
Employer POV = Taxable
How does Employer/Employee private health care plan work?
Employee POV = Not deductible (but qualify for medical expenses)
Employer POV = Not Taxable
