Your best friend, Mitch, was at a sales conference recently. During one of the breaks, he entered into a conversation with one of the other attendees, Darly, regarding the perks provided by their respective employers. In both cases, the employer provides a car. However, Darly commented on the significant tax advantage available to her since her employer leased the car instead of buying the car. Mitch was able to obtain all of the information from Darly regarding her car.
Mitch has come to you for some "free" tax advice. He has asked you to compare the tax position he is in currently with the employer-owned car to the position that Darly is in with the leased car.
Mitch
Capital cost of the car including HST.............................. $38,772
Capital cost allowance claimed by the employer in 2011.......... 6,375
Operating costs paid by the employer ( including HST)............4,250
Kilometers ( as calculated from Mitch's log):
Employment.............................................. 8,000
Personal.................................................. 10,000
Amount reimbursed to the company for the personal use at 14 cents per
Kilometer................................................................ $ 1,400
Darly
Lease cost including $1,650 of insurance and HST.................. $12,450
Operating costs paid by the employer (including HST.................. 2,975
Kilometers (as calculated from Darly's log):
Employment............................................. 23,000
Personal................................................... 9,000
Amount reimbursed to the company for the personal use at 9 cents per
Kilometer ........................................................... $ 810
REQUIRED
Calculate the minimum car benefit which would be included in employment income for 2012 for Mitch and Darly.