Question 1 Which of the following is a taxable benefit? Question 1 options: 1) U

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Question 1 Which of the following is a taxable benefit? Question 1 options:

1) Uniforms and special clothing 2) Employer's contribution to a Registered Pension Plan 3) Free meals while working 4) Retirement counselling

Question 2 Which of the following statements is true regarding employment income? Question 2 options:

1) Some allowances and some reimbursements are taxable.

2) All allowances and reimbursements received are taxable.

3) Some allowances are taxable but no reimbursements received are taxable.

4) All allowances and some reimbursements are taxable.

Question 3 Paiva uses a company credit card, under which loyalty points are earned. The company receives the bill and pays the credit card charges. The employer allows Paiva to redeem the points for her personal use. This year, Paiva redeemed these points for an airline ticket worth $1,000 in the open market. Which of the following statements is true? Question 3 options:

1) Employers must include and report the $1,000 as a taxable benefit on Paiva's T4 slip.

2) CRA no longer requires these benefits to be included in an employee's income, as long as these points are not converted to cash.

3) It is Paiva's responsibility to determine the fair market value of this benefit received and include it in income.

4) Employees are not allowed to use loyalty points collected on an employer's credit card.

Question 4 XYZ Ltd. is a CCPC. Barry, one of the employees, was granted a stock option on October 11, 2007 for 10,000 shares at $3 per share. Barry exercised the stock option on September 30, 2012 when the market price was $6 per share. In February 2018, Barry purchased a new home and sold the shares for $7 each. The fair market value on October 11, 2007 was $4. What is the effect of the above on Barry's income for tax purposes, assuming Barry wants to minimize taxes?

a)$15,000 in 2012 b)$15,000 in 2018 c)$30,000 in 2012 d)$35,000 in 2018 10.Ari's employer provided him with an employer-owned automobile costing $33,900 (including HST of $3,900) for 12 months. His kilometres for personal use were 5,000 out of a total of 20,000 kilometres. Operating costs paid by his employer were $3,503 (including HST of $403). Which one of the following statements is true? Question 4 options:

1) Ari's minimum operating cost benefit is $1,017.

2) Ari cannot elect to use ½ of his standby charge as his operating cost benefit.

3) Ari's minimum operating cost benefit is $1,350.

4) Ari's minimum standby charge is $4,000.

Question 5 Bill is the CEO of ABC Ltd. Bill takes his wife, Mary, on a three-day convention. Mary represents ABC Ltd. at the convention, and hands out brochures and gives a talk on motivational speeches, but she is not an employee of Bill's company. Which of the following statements is true for 2018? Question 5 options:

1) No employee benefits will be added to either Bill's or Mary's income since Mary was primarily engaged in business activities on behalf of Connection Ltd.

2) Fifty per cent of the trip's cost for Mary would be added to Bill's employment income because she is not an employee of the company.

3) The cost of the trip for Mary would be added to her personal tax return as employment income even though she is not a regular employee of the company.

4) The cost of the hotel for Bill's wife would be added to Bill's employment income because she is not an employee of the company; thus, a personal benefit was received.

Question 6 ABC Company provided a leased automobile to an employee. The employee also used the automobile for personal purposes. During the year, the employee used this automobile for 15,000 kilometres in total, including 5,000 kilometres for personal use. The lease cost for this automobile was $4,000 for the year. What will the operating benefit be for the employee? Question 6 options:

1) $ 699

2) $ 666

3) $ 1,200

4) $ 333

Question 7 Which of the following is a taxable benefit? Question 7 options:

1) A Christmas gift to an employee from the employer valued at $450.

2) Payment of the tuition for an employee completing a degree that will benefit the employer.

3) A 20% discount on the cost of a newly constructed house.

4) Subsidized meals offered to all employees of the company assuming the price is approximately equal to the cost.

Question 8 Mark is a commission based sales person. His primary work is away from the head office. Mark's employers signed a T2200 form certifying that no reimbursements are paid for any expenses Mark incurs to earn commissions. Mark incurs the following expenses, exclusively for business use: Meals and Entertainment 15,000 Fuel 5,000 Insurance 1,000 Repairs 1,500 Lease on Car 500/month What are Mark's deductible employment expenses? Question 8 options:

1) 28,500

2) 10,000

3) 21,000

4) 15,250

Question 9 Mu is provided with a vehicle to perform her duties. During the current year, she drove 5,000 kilometres personally and 15,000 kilometres for employment purposes. Her employer pays for 100% of the operating expenses. In the computation of her employment income she must: Question 9 options:

1) Recognize a reduced standby charge benefit and an operating benefit based on the personal kilometres driven.

2) Recognize an operating benefit only because the vehicle was driven substantially for employment purposes.

3) Recognize a standby charge benefit and an operating benefit in her income.

4) Recognize a standby charge benefit, based on the proportion of personal kilometres driven in relation to her total kilometres driven.

Question 10 George moved from Quebec to Ontario, as a result of a promotion by his employer to open a new branch plant. When he sold his house in Quebec he incurred a loss of $100,000 on the sale. George's employer decided to reimburse him for the housing loss of $100,000. Which of the following amounts represent the increase to George's employment income? Question 10 options:

1) $42,500 added to employment income

2) $100,000 added to employment income

3) $85,000 added to employment income

4) No change to employment income

Explanation / Answer

Ans. 1 - Free meal while working only amounts to tax benefits.

Ans. 2- Option 3 is correct- some allowances are taxable but no reimbursements are taxable.Since employees are only supposed to pay taxes on the wages they earn and certain benefits , expenses incurred by the employee during the course of the business is the cost borne by the employer.

Ans. 3- option 3 is correct that is,  It is Paiva's responsibility to determine the fair market value of this benefit received and include it in income. As this is the most ethical behaviour paiva should be doing.

Ans. 4- option 3 is correct that says $30000 in 2012( $6-$3* 10000)

Ari's minimum operating cost benefit is $1350

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