Reference no: EM132909796
Question - Fanta was employed by TSL (a Canadian controlled private corporation), throughout 2020, where she earned a gross salary of $72,000. TSL deducted the following amounts from Fanta's her pay during the year:
Income tax $20,000
Canada Pension Plan 2,749
Employment Insurance 860
Registered Pension Plan contribution 3,000
The following amounts were paid by TSL in 2020 on Fanta's behalf: Canada Pension Plan $2,749
Employment Insurance 1,204
Registered Pension Plan 3,000
Group life insurance 1,200
Additional information:
On January 15, 2018, Fanta was given an option to purchase 500 shares of TSL for $5.00 per share. The market value of the shares on that date was $5.50. Fanta exercised her option on June 1, 2019 when the shares were valued at $7.00. Later in March 17, 2020, she then sold the shares (market value was $8.00 per share).
Fanta was provided with a company car to drive from March 1st to December 31st of the current year. The car cost the company $22,000, plus GST (5%) and PST (6%). She drove the car a total of 15,000 kilometres during the year. 11,000 kilometres were for business purposes and the other 4,000 kilometres were for personal use. TSL paid for all of the vehicle's operating costs which totaled $1,100.
Fanta pays $50 a month for her cell phone which she uses to keep in touch with friends and family. She also pays $80 a month to dry-clean her suits, and she purchases a new suit valued at $200 every three months.
Fanta purchased $300 worth of merchandise (at cost) from her employer during the year. The retail value of the merchandise was $500.
Required -
A) Calculate Fanta's minimum net income for tax purposes for 2020,. Identify items that have been omitted in your calculations.
B) Will Fanta be able to deduct the stock option deduction to arrive at her taxable income? Why or why not?
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