Question

Question 5

Which of the following is a taxable benefit?

Question 5 options:

1) Subsidized meals offered to all employees of the company assuming the price is approximately equal to the cost.

2) Payment of the tuition for an employee completing a degree that will benefit the employer.

3) A 20% discount on the cost of a newly constructed house.

4) A Christmas gift to an employee from the employer valued at $450.

Question 6

Which of the following statements is true regarding employment income?

Question 6 options:

1) All allowances and reimbursements received are taxable.

2) Some allowances are taxable but no reimbursements received are taxable.

3) All allowances and some reimbursements are taxable.

4) Some allowances and some reimbursements are taxable.

Question 7

Sandy is given the choice to receive a pay raise, either as a salary increase of $7,200 or as a benefit of a company leased car that will cost her employer $600 per month to rent, including HST. Sandy has come to you for advice so that she can minimize her employment income and thereby minimize her taxes. Which of the following statements is true?

Question 7 options:

1) Sandy should accept the salary.

2) Sandy should be indifferent between the two choices.

3) Sandy should ask her employer to lease a cheaper car and then pay the difference between the monthly leasing costs as part of her salary.

4) Sandy should accept the leased automobile.

Question 8

Which of the following statement is true?

Question 8 options:

1) Salespeople cannot deduct any expenses that exceed their commission income.

2) Home office expenses for insurance and property taxes can be deducted under ITA s.8(1)(f).

3) When calculating employment income for a salesperson, ITA s.8(1)(f) must be used.

4) Mortgage interest and CCA on a salespersons' home office are deductible up to a maximum of the salesperson's commission income.

Question 9

Which of the following items are considered taxable employment benefits?

i.Employer contributions to a RPP

ii.Employer contributions to a private health care plan

iii.Employer paid premiums to a term life insurance plan

iv.Employer contributions to a DPSP.

Question 9 options:

1) i and iv only

2) iii only

3) i only

4) iii and iv only

Question 10

Mark is a commission based sales person. His primary work is away from the head office. Mark's employers signed a T2200 form certifying that no reimbursements are paid for any expenses Mark incurs to earn commissions. Mark incurs the following expenses, exclusively for business use:

Meals and Entertainment 15,000

Fuel 5,000

Insurance 1,000

Repairs 1,500

Lease on Car 500/month

What are Mark's deductible employment expenses?

Question 10 options:

1) 10,000

2) 15,250

3) 21,000

4) 28,500

Answer 1

Question 5. 3. A 20% discount on the cost of the newly constructed house.

Meal is provided at a price equal to cost thus it is not taxable, tution fees is given for the benefit of the employer and christmas gift is below $500, thus are not taxable.

Question 6. 4. Some allowances and some reimbursements are taxable.

Question 7. 4. Sandy should accept the leased automobile.

Lease automobile is taxable only for the personal use of the automobile.

Question 8. 3. When calculating employment income for a salesperson, ITA s.8(1)(f) must be used.

Question 9. 2 (iii) only

Question 10. 3.$21000 (meal and entertainment-$15000, lease on car $6000)