1. Jack is an employee of ABC, a Canadian-controlled private corporation (CCPC). The following was provided to you by Jack regarding all his financial and non-financial transaction during 2020. He received the following during 2020:

Gross salary				$60,000
Payroll deductions:
	Income taxes	$12,000
	CPP premium	2,307
	EI premium	840
	RPP – employee contributions	4,200
	Union Dues	375
	Group accident disability insurance Use of employer car	200 1,900		(21,822)
	Net pay			$38,178

2. Director's fees of $2,400 received from being on the board of XYZ, a public   corporation controlled by ABC.

3. For his good performance he awarded $20,000 bonus of total bonus he receives       $12,000 in Dec 25, 2020 and the reminder to be paid next year.

4. A birthday gift of new iphone was given to Jack for his personal use. ABC corporate policy was to deduct such gifts, the cost of the phone was $750 including taxes

5. Jack and his spouse rented the company's condo in Colorado for two weeks during the winter ski season. They had to pay ABC $500 per week for accommodations that would otherwise have cost them $1,400 for the entire stay. Jack was not involved in any business activities during this trip.

6. Jack’s spouse accompanied him on a business trip to Cuba that was paid for by his employer. The main purpose of the trip was for Jack to work with a customer. His spouse performed no business function during the trip. They did not extend their trip to include a vacation. Jack’s expenditures of $5,000 were paid by ABC and were reasonable in relation to the business function. The portion of the travelling expenses related to Jack’s spouse were also paid by ABC and amounted to $1,000.

7. During 2020, ABC paid for Jack to have his income 2020 tax return prepared by the company’s accountants at a cost of $375. ABC also made available in-house staff to provide Jack with retirement planning advice valued at $800.

8. During the year, ABC provided its employees with free meals in the company cafeteria. Jack’s meals cost the company $1,100 to prepare and serve. The meals would have cost Jack $1,900 in a similar commercial restaurant.

9. ABC provided Jack with a car for the entire year, which they bought in 2018.

Capital cost of the car	$38,529
Capital cost allowance claimed by company	5,085
Operating costs paid by the company	4,300
Kilometres driven in 2020 as per Jack’s log:
Business use	12,400
Personal use	7,600
Amount paid by Jack to ABC for personal use at $0.25 per kilometre (7,600 km × $0.25)	1,900

10. In May 2020, Jack was in a production accident and was unable to work for four weeks. During this period, he received disability payments totalling $11,538 from the insurance company. Disability insurance premiums shared equally by the employer and employee. The plan was started in 2018 and the annual premiums have been not changed.

11. Jack's home required some major renovations as a result of a fire. While the property was not inhabitable, ABC provided Jack with a company‑owned apartment. Jack stayed in the apartment for two months, paying $300 per month, while rent in this building for a similar unit was $1,000 per month.

12. ABC provides Jack with a one year membership in Province of Alberta golf club. The cost of this annual membership was $1,300 paid by ACB.

13. On Feb 15, 2020, Jack receives options to buy 200 shares of ABC. Common shares at price (exercise price) $23. The market price was $21. Jack exercise the option on August 12, 2020 when the price $28 per share. Jack plan to hold those shares for few years

14. On Jan 1, 2020 ABC provide Jack with a $50,000 loan at annual interest rate of 5.5%. The prescribed rate was 5% for all quarters in 2020.

15. The company installed recreational facilities at its head office. All employees are permitted to use these facilities free of charge. The equivalent value for similar facilities at a private club would be $1,100 per year.

16. Jack paid $1,800 in annual dues to a professional accounting association.

17. Other disbursements made by Jack includes the following:

- Advanced accounting course tuition fees   $1,200

- Music history course tuition fees (U of A)        600

- Payments of premiums on life insurance       2,400

required by his Bank (to cover his personal mortgage)                                   

Required:

Calculate Jack’s net employment income for 2020. In detailed notes, provide reasons for any items not include in your calculations. Also, reason with calculation (if needed) for amounts included in your calculations. (Numbers without support note explanation will be granted “0” even if your final answer is correct)- You can refer to the format posted on Black board

Note: For each calculation you MUST provide the ITA section, Sub-section, Paragraph, sub paragraph, close and sub-close if any.

Answer rating: 100% (QA)

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