What is T Adams taxable benefit on the loan

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Question - 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

Reference no: EM133008471

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