Your brother Jack is working as a marketing manager for the X Company located in Montreal. Jack worked in Montreal for five years but In March 2021, his Company moved him from Montreal to Toronto because they needed him to assist in growing sales in the Ontario area. X is a Canadian controlled private corporation.

Jack is aware that you have done a tax course and has asked your advice in assisting him to compute his employment income for 2021. He has provided you with the following information:-

Gross Salary $260,000

Deductions:

Canada Pension Plan contributions ($ 2,376)

Employment Insurance contributions ($ 889)

Registered Pension Plan contributions ($ 6,000)

Income Taxes ($75,000)

Group Disability Plan contributions ($ 300)

Group Term Life insurance ($ 180)

Union dues ($1,500)

Additional Information:-

I. The employer gave him a moving allowance of $6,000 to assist him to move from Montreal to Ontario. They also re-imbursed him $30,000 for the loss on the sale of the house in Montreal.

ii. When he arrived in Toronto with his wife and 2 children, the Company rented an apartment for him and paid $2,800 per month for 2 months since he was unable to immediately move into the home he purchased in Toronto. Jack was not required to reimburse the employer for the rental.

iii. Jack borrowed from the employer the following amounts :-

a. On April 1^st. 2021, $400,000 for the purchase of a home in Queen’s Quay, Toronto. The Company charged him 1% per year for the loan. He received this loan on April 15^th.2021

b. On June 1^st he received $5,000 for the purchase of a computer and home office desk He received this loan at 2%.

The fair market value of interest rates in 2021 were as follows:-

1^st.Qtr.=2%;2^nd.Qtr=3%; 3rd. Qtr. 4%; 4^th. Qtr. 2%

iv. On March 15^th, 2021, Jack exercised an option to buy 2,000 shares of his Company at $15 per share. The fair market value of the shares on this date was $17/share.. Also in October 2021, he was granted another option to purchase 1,500 shares which had a fair market value of $20 per share at the time. The exercise price is $18 /share. In November 2021, he bought 800 of these shares. On December 20^th.2021, he needed cash to purchase Xmas gifts for his family. He sold 500 of these share when the market price of the shares was $22/share.

v. As part of his employment contract, X Company provided Jack with a new purchased vehicle on January 1^st. 2021. The employer paid the following expenses relating to the car:-

Lease payments……………………………………………$12,000

Gas and oil……………………………………………………. 1,800

Insurance…………………………………………………….. 2,000

Maintenance………………………………………………. 9,000

Licence ………………………………………………………. 150

He drove a total of 30,000 kilometres of which 18,000 was employment related.

He reimbursed the employer $150 per month for the use of the car.

vi. In late January, 2021, Jack was involved in a ski accident and was unable to work for the month of February. The Manulife Insurance Company paid him $8,000 under the Group Disability Plan. The premiums paid to date was $5,000.

vii. A cash birthday gift of $250 was paid to Jack.

viii. Cost to the company of him eating lunch once per month in the executive dining room at no charge was $200.

ix. Premiums paid by the Company for his dental insurance was $500.

x. In August, 2021, Jack’s spouse accompanied him on a business trip. The main purpose of the trip was for Jack to set up a sales region in Niagara, Ontario. His spouse did no work during the trip. The spouse’s expenses for the trip was $5,000. The Company agreed to pay these expenses.

xi. The Company installed recreational facilities at its head office location. All employees were allowed to use the facilities free of charge. The applicable fees for similar facilities was $1,200 per year. Jack used these facilities during his lunch break.

xii. The Company paid $2500 tuition fees for Jack to attend a marketing seminar in Mississauga. The Company also paid $500 for Jack to attend a yoga fitness class.

Required:-Calculate Jack’s 2021 employment income following S3 of the ITA. Show all calculations. List all exclusions from your calculations.

Answer rating: 100% (QA)

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