Question

Course- Introduction to Taxation (Canadian)

1. A $100 cash award given for exceptional customer service' by an employer to an employee, is a tax-free benefit.

True or False

2. An allowance may only be considered unreasonable if it is too high.

True or False

3. In some cases, an employee can receive a tax-free benefit, while the employer can deduct the cost of providing the benefit from their business income.

True or False

4. The primary advantage of deferred compensation plans, such as a Registered Retirement Plan (RPP), is the income tax refund the employee receives for the amount of the employer's contributions.

True or False

5. Which of the following, when provided by an employer, is NOT a tax-deferred or tax-free benefit for the employee?

Multiple Choice

• Premiums for private health care plans providing extended health coverage beyond a public plan

• Counselling services to prepare the employee for retirement

• Contributions to the employee's registered pension plan

• A near-cash gift for the employee's wedding

Course- Introduction to taxation (Canadian)

Answer 1

1) False because the gift in cash or nearly cash items are always taxable

2) False as allowance is unreasonable if it is too low also

3) Yes, there are tax free benefits that employee receive such as subisdised meal, any allowance given during extended working hours (unless it is regular)

4) False, only employees contribution to RPP is allowed as deduction

5)A near-cash gift for the employee's wedding is not tax free benefit as near cash item is always taxable