Reference no: EM132995104
#1) Lee's Cycle Shop offers its employees a group disability plan. The plan provides periodic benefits that compensate for lost employment income. Sasha Quinn is an employee who was hospitalized for four week in 2017. What amount will Sasha Quinn include in her employment income? (show all calculations) Details related to the plan are below:
Total Benefits Received in Year: $ Cumulative Contributions to Plan
5,151
by Employer: $1,000 Cumulative Contributions to Plan
by Employee: $ 1,960
#2) Based on the following information determine the tax consequences of the bonus to both Big Blu Ltd. and Mr. Harley Blu the founder of the company.
i) Big Blu Ltd.'s Year End December 1, 2017
ii) Date the bonus was declared October 5, 2017
ii) Date the bonus was paid April 20, 2018
iv) Amount of the bonus $43,000
#3) Mr. Logan is a salesperson and is considering the following offers of employment at Woods Manufacturing Ltd.
Both of these offers would require that Mr. Logan start employment on January 2, 2017.
regarding Mr. Logan's employment. The following information is given
Offer #1
i) Mr. Logan's gross salary for the year ending December 31, 2017 would be: $225,000
ii) Mr. Logan would have the above fixed salary with no commissions.
iii) Mr. Logan's employer would withhold the following amounts from his income:
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Federal Income Tax Withheld at Source
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$56,250
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CPP Contributions Withheld at Source
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2,564
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EI Insurance Premiums Withheld at Source
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836
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Employee's RPP Contributions
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11,250
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iv) Mr. Logan's employer would also make a matching contribution to the RPP in the amount of: $11,250
v) The employer would pay for a Group Dental Plan with Sun Life for Mr. Logan at a cost of: $1,100
vi) Wood Manufacturing Ltd. would lease a vehicle for Mr. Logan at the start of his employment and he would have exclusive use of this vehicle for the duration of his employment.
Lease Payments per month is: $355 Includes Lease Insurance per month of: $39
The company would pay for all of the operating costs of the automobile which are estimated to be: $18,000
vii) The company would provide Mr. Logan a Travel Allowance for Hotel, Meals and Airline $34,000 CRA will consider this Travel Allowance to be reasonable in the circumstances.
No allowance is provided for Advertising, Promotion or Entertaining Client expenses.
viii) Wood Manufacturing Ltd. would provide a loan to Mr. Logan so that he can have additional funds for his investment portfolio. The loan would be required to be repaid after five years. The loan would commence on January 2, 2017 and the required interest would be paid annually on December 31.
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Loan Amount
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$108,000
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Interest Rate on Loan
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3%
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Prescribed Interest Rate for 2017
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8%
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Offer #2
i) Mr. Logan's gross salary for the year ending December 31, 2017 would be: $172,000
ii) Mr. Logan would also earn commissions based on his sales which are estimated to be: $26,000
iii) Mr. Logan's employer would withhold the following amounts from his income:
Federal Income Tax Withheld at Source $49,500
CPP Contributions Withheld at Source 2,564
EI Insurance Premiums Withheld at Source 836
Employee's RPP Contributions
iv) Mr. Logan's employer would also make a matching contribution to the RPP in the amount of: 9,900
$9,900
v) The employer would pay for a Group Dental Plan with Sun Life for Mr. Logan at a cost of: $1,100
vi) The company will reimburse Mr. Logan for travel costs incurred for employment for Hotel, Meals and Airline .
vii) The company will not provide Mr. Logan with a vehicle but will provide a monthly vehicle allowance of: $2,400
viii) Mr. Logan estimates that the total costs associated with owning a vehicle in 2017 will be: Operating Costs $13,000
Capital Cost Allowance ( Tax Depreciation) (100%) $3,300
Financing Costs $1,100
Other Information:
The following information is applicable to both of the alternative offers.
1. Both offer include a $1,000,000 face value life insurance policy. The company will pay all of the premiums $3,300
2. Employment related expenses for 2017 are estimated to be as follows:
Hotels $8,100
Air Travel $8,500
Meals incurred while travelling $7,300
Advertising and Promotion $20,000
Entertaining Clients $6,600
3. Whether it is the employer's automobile or his own personal vehicle, he would use the car throughout 2017. 55,000 KM are estimated to be driven in total for 2017
42,000 KM are anticipated by Mr. Logan to be related to employment activities.
4. Mr. Logan will be required to provide a home office where he will have a separate room used exclusively to meet clients on a regular basis.
The annual costs related to his home are provided below:
House Insurance $1,200 Property Taxes $4,600
House Heating Costs $2,400 Mortgage Interest $18,500
House Power Costs $1,900 Painting (office space) $130
Purchase of Desk and Chair $1,800
Total Square Footage of Personal House: 2,000 Total Square Footage of Home Office: 160
Required:
1. (a) Calculate Mr. Logan's minimum Net Employment Income for the year ending December 31, 2017 for the employment offer #1. (provide all calculations and explanations)
1. (b) Calculate Mr. Logan's minimum Net Employment Income for the employment offer #2. (provide all calculations and explanations)
2. Explain one advantage and one disadvantage from either offer.
Attachment:- Chapter -Assignment.rar