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Ms. Mika Lord owns 60% of the outstanding shares of Lord's Luges Ltd., a CCPC with an August 31 taxation year-end. Ms. Lord's common-law partner, Jiang Buff, owns the remaining shares of this company.

Lord's Luges has been extremely successful and, as a result, has accumulated over $3,050,000 in cash that is not needed in the business. Because of this, the company has a very generous policy with respect to making loans to employees.Under this policy, any employee (including both shareholders who are also employees) is entitled to: A loan of up to to acquire a principal residence at an interest rate of %. Loan to be repaid over a -year period in equal annual instalments plus interest. $180,000 2 four An interest-free loan of up to to purchase an automobile if used to carry out employment duties. This loan is to be repaid over a maximum of years. $27,000 four In 2023, Ms. Lord took advantage of the loan policy as follows. Principal Residence Loan On July 1, , Ms. borrowed from the company. The loan will be repaid over a -year period in equal instalments of plus interest on January 1 of each year beginning January 1, . 2023 Lord $180,000 four $45,000 2024 Automobile Loan On September 1, , Ms. borrowed interest-free to purchase an automobile she will use in carrying out her employment duties. She is not sure when she will be able to repay this loan. 2023 Lord $27,000 In addition to these loans that are available to all of the employees of 's Luges Ltd., Ms. receives several other loans that will be used for various personal expenditures. Lord Lord February 1, 2023: Ms. Lord borrows $41,000 at 2% interest. This loan will be repaid on December 1, 2025. July 1, 2023: Ms. Lord borrows $27,000 on an interest-free basis. This loan will be repaid on August 30, 2024. December 10, 2023: Ms. Lord borrows $49,000 at 4% interest. It will be repaid on July 1, 2025. All repayments are made as scheduled. Assume the prescribed interest rate is 4% for all years.Required What are the income tax consequences of receiving each of these loans for the years 2023, 2024, and 2025? Briefly explain your conclusions. Calculate any interest benefit using months instead of days.Describe the income tax consequences of Mika Lord receiving the principal residence loan. Complete the below sentences. As such loans are available to all employees, Ms. Lord can claim that she has received the loan in This means that the loan being included in her income as income from property for 2023 does not apply to ITA 15(2). applies to ITA 15(2). The rate on the loan is the same as the prescribed interest rate. less than the prescribed interest rate. greater than the prescribed interest rate. There will be an interest benefit that will be included in her income as income from employment . Now, calculate the interest benefit for 2023. (Round your answer to the nearest whole dollar.) Loan principal ( Prescribed interest rate - Company interest rate ) Fraction of year = Interest benefit, 2023 ( - ) = Part 3 Now, calculate the interest benefit for 2024. (Round your answer to the nearest whole dollar.) Loan balance, 2024 ( Prescribed interest rate - Company interest rate ) Fraction of year = Interest benefit, 2024 ( - ) = . Describe the income tax consequences of Mika Lord receiving the automotive loan. Complete the below sentences. The motor vehicle exception applies. does not apply. This is because the repayment date is less than one year. less than two years. more than two years. not known. The two-year limitation establishes the deadline of August 31, 2023. December 31, 2023. August 31, 2024. December 31, 2024. August 31, 2025. December 31, 2025. Amounts that are repaid will not be required to be included in income but will be subject to an interest benefit through ITA 80.4(1) as employment income if repaid by August 31, 2023. December 31, 2023. August 31, 2024. December 31, 2024. August 31, 2025. December 31, 2025. Any amounts repaid after this date will be included in Mika's income as income from property under ITA 15(2) in 2023. 2024. 2025. Subsequent repayments related to amounts included in her income are eligible for a deduction under ITA 20(1)(j) in the year of repayment. not eligible for a deduction under ITA 20(1)(j) in the year of repayment. Part 6 Describe the income tax consequences of Mika Lord receiving the loan taken out on February 1, 2023. Complete the below sentences. With respect to Ms. Lord's 2023 income, the loan must be included. does not have to be included. This is because the loan is repaid prior to August 31, 2023. not repaid prior to August 31, 2023. repaid prior to August 31, 2024. not repaid prior to August 31, 2024. not repaid prior to August 31, 2025. not repaid prior to December 31, 2023. not repaid prior to December 31, 2024. repaid prior to December 31, 2023. repaid prior to December 31, 2024. repaid prior to August 31, 2025. Ms. Lord is entitled to a deduction under ITA 20(1)(j) from the repayment of $ 41 comma 000 in 2023. 2024. 2025. There will be an interest benefit. not be an interest benefit. This is because the loan was not included in her income. included in her income. Part 7 Describe the income tax consequences of Mika Lord receiving the loan taken out on July 1, 2023. Complete the below sentences. With respect to Ms. Lord's 2023 income, the loan does not have to be included. has to be included. This is due to the loan not being repaid prior to December 31, 2023. not being repaid prior to August 31, 2025. being repaid prior to December 31, 2024. being repaid prior to December 31, 2023. being repaid prior to August 31, 2023. being repaid prior to August 31, 2024. not being repaid prior to August 31, 2023. not being repaid prior to December 31, 2024. being repaid prior to August 31, 2025. not being repaid prior to August 31, 2024.In this step, calculate the interest benefit for 2023. (Round your answer to the nearest whole dollar.) Loan principal Prescribed interest rate Fraction of year = Interest benefit, 2023 = Part 9 In this step, calculate the interest benefit for 2024. (Round your answer to the nearest whole dollar.) Loan principal Prescribed interest rate Fraction of year = Interest benefit, 2024 = Part 10 Calculate the interest benefit for 2025. (Round your answer to the nearest dollar. For entries with a $0 balance, make sure to enter "0" in the appropriate input field.) Interest benefit, 2025 Part 11 Describe the income tax consequences of Mika Lord receiving the loan taken out on December 10, 2023. Complete the below sentences. With respect to Ms. Lord's 2023 income, the loan has to be included. does not have to be included. This is because the loan is repaid prior to December 31, 2024. repaid prior to August 31, 2025. not repaid prior to August 31, 2023. repaid prior to August 31, 2023. not repaid prior to August 31, 2025. not repaid prior to August 31, 2024. not repaid prior to December 31, 2024. repaid prior to December 31, 2023. not repaid prior to December 31, 2023. repaid prior to August 31, 2024. Part 12 Calculate the interest benefit for each year. (For entries with a $0 balance, make sure to enter "0" in the appropriate input field.) What is the amount of interest benefit for 2023? What is the amount of interest benefit for 2024? What is the amount of interest benefit for 2025?