Reference no: EM133022213
Question - On March 1, 2018, Flight Inc. provided Steve Wilson with a company-owned automobile. The cost of the automobile acquired in 2018 was $57,000 including provincial sales tax and GST. The undepreciated capital cost of the automobile as at March 1, 2020 was $20,400.
The automobile was used by Steve to carry out his employment duties in the current year. Flight Inc. paid for all automobile operating expenses of the automobile between January 1 and December 31st of the year. The total amount of the operating costs were $4,000 including $150 of provincial sales tax.
Steve did not make any reimbursement in respect to the operating costs but did reimburse the company $250 per month for the personal use of the automobile for the year.
The automobile was driven as follows for the period January 1 to December 31st.
Employee duties 15,000
Personal use 10,000
REQUIRED -
A) Calculate the total amount of automobile benefit with respect to the use of the company's automobile that Steve must include in his 2020 employment income. Assume that today's date is Feb. 15th of the following year. Show all calculations including any alternatives to a particular calculation explaining why the alternative may or may not apply.
B) As an independent situation from Part A (i.e. ignore part a), assume that Steve is an non-commission salesman who is required to travel under his contract of employment away from the employer's place of business and pay for his own expenses. Further assume that Steve commences his employment on January 1st of the year and is employed for the entire year. Steve purchased his own automobile for $20,000 and Flight Inc. agreed to pay Steve a flat automobile allowance of $500 per month.
Steve paid for all operating expenses for the year which consisted of $400 for insurance, $1,200 for fuel and $300 for repairs. He also paid $120 per month in interest on a loan obtained to finance the purchase of the automobile. Assume Steve uses the car 80% for business. In addition, Steve paid $800 with respect to annual professional membership fees.
What is the amount of net employment income to be included in income in the year based on the information provided? (Assume that capital cost allowance in respect of the automobile is $3,000).