Ms. Nancy Drew was an insurance specialist in Toronto, specializing in the pricing of insurance products across
Question:
Ms. Nancy Drew was an insurance specialist in Toronto, specializing in the pricing of insurance products across Canada. In 2020, Nancy was approached by an insurance company (ABC Inc.), a public company, in Victoria, B.C. that was in need of someone to lead their pricing team. When ABC offered her a position in October 2020 with a start date of January 1, 2021, she immediately accepted. Her home in Toronto had cost her $525,000, but she ended up selling it for $390,000 in February 2021, resulting in a $135,000 loss on the property.
Other Information:
Other information relevant to 2021 is as follows:
- ABC owned a suite hotel and offered her the use of a unit there at a rate of $2,000 per month. The regular monthly rate for the unit was $5,000 per month. She moved in on January 1, 2021. She eventually finds a home in Victoria that she purchases on May 15, 2021 for $1,600,000. After doing extensive renovations, she moves out of the hotel and into her house on July 1, 2021.
- As an incentive to accept the position, ABC agreed to compensate her for one-half of any loss on the sale of her Toronto home. The $67,500 [(1/2)($135,000)] payment was made on May 30, 2021.
- In order to help Nancy with the purchase of her new townhouse, ABC provided her with a $100,000 interest free housing loan. The funds are provided to Nancy on May 1, 2021. Assume that them prescribed rate for all of 2021 is 2 percent and the loan is still outstanding at the end of the year.
- During 2021, Nancy received a salary of $175,000. This included several large bonuses. The Company withheld the following amounts from her salary:
Income Taxes $53,000
RPP Contributions $2,500
- ABC contributed $2,500 on Nancy’s behalf to the Company’s RPP.
- ABC provides group medical coverage to all of its employees. The private health plan premiums paid by ABC on Nancy’s behalf cost $1,115 for the year.
- During the year, Nancy received one non-cash gift from ABC, a spa pass worth $1,200.
Nancy was granted options to buy 100 of the company's shares at $100 per share when she joined the staff of ABC. At that time, the shares were trading at $94 per share. On May 10, 2021, the shares are trading at $123 per share. She acquires 50 shares for cash of $5,000 on that date. She is still holding these shares on December 31
Part A (13 marks):
Calculate Nancy’s net employment income, indicating the inclusions and deductions. If an item listed above is not included or deducted, explain why