individual tax

Question 1

employment income =

Answer 1

salary, wages, commisions, gratuties, remuneration
+) sum of benefits
+) sume of allowance
minus deductions that are permitted

Question 2

employment income is determined on

Answer 2

cash basis

Question 3

the taxable income amount of benefit is based on

Answer 3

lower cost to the employer or fair value of the benefit

Question 4

types of benefits to employee

Answer 4

1. rent-free/low rent housing
2. gifts (non-cash gifts less than $500 per year are not taxed)
3. premiums paid by the employers by company’s group term life insurance policies
4. trips, prizes, incentivce awards
5. interest- free or low interest loans
6. club dues (personal)
7. tuition fees paid by the employer, unless the particular course was undertaken at the initiative of the employer for the maintenance or upgrading emplyer-related skills

Question 5

car benefit (more than 50% personal)

Answer 5

• standby charge: cost of car x 2% x number of months the car was available to the employee
• $o.33 x km driven in the year for personal use

Question 6

reduced car benefit (50% for work, less than 1667km per month for personal)

Answer 6

• reduced standby charge: cost of car x 2% x number car avai x km driven for personal use / (1667km x number of months the car was available to the employee)
• operating cost (lower of two)
  $0.33 x km driven for personal use, or
  50% if the amount of the reduced standby charge

Question 7

benefit from loan from employer

Answer 7

= amount of the loan multiplied by the CRA presribed interest rate for the periods in the year - actual interest paid (if any) no later than 30 days after the end of year

Question 8

stock options benefit

Answer 8

= fair market value of the shares when the employee acquired them - option price (amount paid or to be paid)

Question 9

Non taxable benefits

Answer 9

• employers contributions to an employee’s RPP
• payment of insurance premiums for the employee’s group sickness or accident plans
• discount on merchandise (as long as the price > cost)
• use of recreational facilities
• home computers for work
• employer-provided social events if they are available to all employees and cost less than $150/person per year

Question 10

deductions from employment income

Answer 10

1. salespeople’s expense that are incurred by employees who earn commission income (car expense, travel, etc). Total amount deducted is limited to their total commission income
2. professional and union dues paid by the employee
3. cost of supplied paid by employee
4. contributions made by the employee to RPP
5. workspace in home

Question 11

individual investment income include

Answer 11

• interest income from savings, deposits, loans and bond
• dividends from investment in shares
• rental income
• capital gains on sale of investment

Question 12

deductibility of interest expense

Answer 12

• interest on funds used to earn income from investments - deductible
• interest for personal assets/late payment -> not ded.

Question 13

capital gain for tax purposes

Answer 13

• only 50% a capital gain is taxable
• it capital loss - can be deducted from a capital gain in the same year. if not, can be carried over next year

Question 14

sale of one’s home

Answer 14

sales of your home (principle residence) is not taxable since the taxpayer can claim a principal residence exemption

Question 15

other incomes

Answer 15

• scholarship (exempt from tax)
• pension income on retirement
• alimony/spousal support received

Question 16

other deductions

Answer 16

• moving expenses incurred
• childcare expenses
• spousal support paid