Questions -
Question 1 - Stirling owns a vehicle which he is required to use in his duties of employment. He estimates that in 2013 the CCA based on his employment use would be $ 5,000. His gas, oil, and maintenance expenses (paid by Stirling and pro-rated for employment use) were $4,500. He receives an allowance based on prescribed rates which his employer considers to be a reasonable allowance. This year Stirling received $10,500 based on 21,250 km driven related to his employment. What is the impact on Stirling's employment income?
(a) He must include $10,500 into income
(b) He must include $10,500 into income but may deduct $9,500
(c) He must include $10,500 into income but may deduct $4,500
(d) There is no impact. There is neither inclusion nor deduction
Question 2 - Which of the following is not a taxable benefit?
(a) A Christmas gift to an employee from the employer. (All the employees received the same gift, cash of $150).
(b) Payment of the tuition for an employee completing a degree on a part-time basis. (course not related to employment duties)
(c) Low rent housing provided by the employer
(d) None of the above; each item is a taxable benefit.
Question 3 - Matthew Fisher is employed as a tax auditor. He teleworks and he is required, by contract, to maintain a home office. Matthew works at home most of the time and has been provided with a laptop computer and a fireproof safe to keep audit files secure. He has not been reimbursed nor given an allowance in connection with his home office expenses. The home office is about 10% of his residence. His costs for his home are:
House Insurance $ 2,000
Property Taxes 4,000
Heat, Hydro and Maintenance 5,000
Mortgage Interest 24,000
What is the maximum amount that Matthew can claim as a deduction for the costs he incurred in respect of the home office?
(a) $0
(b) $500
(c) $1,100
(d) $3,500
Question 4 - Which section allows deductions from employment income?
Question 5 - Where in the Act is it stated that the provision of an automobile to an employee by an employer is a value to be included in the employee's income?
Question 6 - Which one of the following would be considered employment income for Canadian income tax purposes for 2012?
(a) Amounts paid by your employer for counselling services in respect of mental and physical health.
(b) A private health services plan premium paid by your employer.
(c) Benefits paid by your employer to a deferred profit sharing plan that does not pay out until 2021.
(d) An all-expense-paid trip to Europe provided to you by a supplier of your company for reaching a sales quota.
Question 7 - T. Adams commenced employment at Moana Sales Ltd. on February 1, 2012. T. Adams had lived in an apartment and he moved into his house on May 1, 2012. Under the terms of his employment, he received a housing loan on March 12, 2012 for $80,000 at a rate of 3%. He pays the interest on the loan on a monthly basis.
Assume the 2012 prescribed interest rates for employee loans are as follows:
First quarter 4%
Second quarter 4%
Third quarter 4%
Fourth quarter 5%
What is T. Adams' taxable benefit on the above loan for 2012? Ignore the effects of leap years.
(a) Nil
(b) $647
(c) $3,233
(d) $3,455
Question 8 - Rally Bicycle Manufacturing Ltd. is a public corporation. Bradley Wiggin, one of the employees, was granted a stock option on October 11, 2004 for 10,000 shares at $3 per share. Bradley exercised the stock option on September 30, 2007 when the market price was $6 per share. In February 2012, Bradley purchased a new home and sold the shares for $7 each. The fair market value on October 11, 2004 was $4. What is the effect of the above on Bradley's employment income for tax purposes?
(a) $30,000 in 2007
(b) $40,000 in 2012
(c) $35,000 in 2012
(d) $30,000 in 2012
(e) $15,000 in 2012
Question 9 - In 2012, Alpha's employer provided him with an employer-owned automobile costing $33,900 (including HST of $3,900) for 12 months. His kilometres for personal use were 5,000 out of a total of 20,000 kilometres. Operating costs paid by his employer during 2012 were $3,503 (including HST of $403). Which one of the following statements is true for 2012?
(a) Alpha's minimum operating cost benefit is $1,017.
(b) Alpha's minimum operating cost benefit is $1,200.
(c) Alpha cannot elect to use ½ of his standby charge as his operating cost benefit.
(d) Alpha's minimum standby charge is $4,000.