Hubert is employed by the Mines of Moria Bank, an entity duly licensed under the Banking Act, as a sales manager. For the year 2020, he received a basic salary of $400,000 per month and a traveling allowance of $40,000 per month. He also has use of a credit facility extended by the Bank of up to $100,000. The Bank wrote off an amount of $80,000 owed by Hubert under this arrangement. Hubert contributes to an approved pension fund at the rate of 10% of his basic salary. Mines of Moria Bank owns and fully maintains the motor vehicle Hubert uses in his employment. The traveling allowance granted by the Revenue to its traveling officers may be taken as $300,000 per annum. The motor vehicle provided by his employer is two years old, cost $4,000,000, and is used 48% privately by Hubert. Hubert received a meal allowance of $98,000 for the year. Of this amount. $42,000 related to overtime work done for the year. 

Hubert also receives a uniform allowance of 108,000 per annum. Hubert earned interest of 50,000 for the year in a fixed deposit held with Banita investments and dividends of 140,000 from investments in various corporate securities. Hubert's employer pays a monthly rent of $125,000 to an unconnected landlord on his behalf. Hubert is required to live in the particular accommodation for reasons connected with performing his job more efficiently and effectively. the employer pays a mo $125,000 to an unconnected landlord on his behalf. Hubert, I Time left 1:34:5 in the particular accommodation for reasons connected with performing his job more efficiently and effectively. Hubert took out two loans as at January 1, 2020 and paid nothing on either loan as at December 31, 2020. One of the loans was in the amount of $2,500,000 @ 5% to purchase furniture for his home and the second of $4,300,000 @ 10% was used to purchase land. The prescribed rate was 25%. Hubert completed the extremely difficult Chartered Banking exam in June 2020. He was given an award of $100,000 in recognition of this feat. The Bank provided Hubert with the use of a cell phone. Hubert does not require a phone for the efficient or effective performance of his duties. The Bank has agreed that it will pay a maximum of 6,000 per month for his cell phone expenses. During the year he incurred a total of $88,500 of cell phone charges. 

The Bank also provides Hubert with a credit card. During the year, his private expenditures amount to $280,000. Hubert reimbursed the Bank $70,000 for these expenditures. Hubert entered into an arrangement with the bank for Daniella, his 19-year-old daughter, to collect a portion of his (Hubert's) emoluments. For 2020, Daniella collected $21,000 per month under the terms of this arrangement. 

Required: 

(a) Calculate Hubert's annual net pay/ net emoluments for 2020. Show all calculations using the columnar format, being mindful to show Gross, Statutory, and Taxable Emoluments! Please state explicitly any assumptions which you deemed necessary to make in approaching this problem. Additionally, you are required to supply notes for all items omitted from the layout. Marks will be awarded for supporting notes and calculations.

(b) For this section, suppose instead that Hubert borrowed both amounts to invest in his brother's business with the rest of his pay package remaining unchanged. Clearly explain state what difference - if any - this single change would make in the computation of his taxable emoluments. A brief re-calculation of the gross emoluments may be done if deemed necessary.

Answer rating: 100% (QA)

ANSWER a Gross Emoluments Basic Salary 400000 Travelling Allowance 40000 Total 44000... View the full answer