Assignment problem 1-13:

Net income for tax purpose (Division B):

Employment income $82,600
Rental income =12,200 $3800
Less: Business loss (8400)
Capital gain = 15,600 Nill
Less: Capital loss = (15600)
Total income $86,400
Less: deduction (5,400)
Income for tax purpose $81000

Carry forward loss = $23,400 – $15,600

=$7800
Assignment problem 3-2:
The fundamental benchmark for determining the type of relationship between a worker and an
employer is based on four major points: control, tool ownership, profit and loss potential, and
integration. Taxes, benefits, working hours, and contract terms. are another factor to consider.
Control
Control is the ability to have the authority to assign work, direct, and supervise the worker is
doing the work. An employer gives directions regarding how the work assigned is to be carried
out. The employer determines the salary or wages of his employees. He determines the place,
time, and manner in which the employee is paid.
An employer hires an employee to perform specific duties as assigned by the employer. The
relationship between the employer the worker is an employer-employee relationship.
An independent contractor has a business relationship with the company that awards the contract.
He is usually contracted to perform a specific task in a particular field of his expertise. The
independent contractor controls the project and makes decisions on how the work is to be
performed. He also decides where to perform the work and the time within which to complete
the work.
He is personally responsible for planning the work and decides his working hours. The
independent contractor is also responsible for setting the standards to be met in a particular
project and ensuring that the set standard is met.
Application:
Although the Payor's hours of operation were from 8:00 AM to 5: 00 PM, Monday to Saturday.
•the Appellant set his own schedule of hours and days of work.
•the Appellant could work anytime between 8:00 AM and 10:00 PM, Monday to Sunday.

•the Appellant did not have a set minimum number of hours of work required.
•the Appellant kept a record of his hours worked.
•the Appellant contacted the students and scheduled the road instruction.
•the Appellant chose the routes for the lessons.
•the Appellant was able to hire his own helper for administrative tasks.
Ownership of Tools:
An employer supplies employees with tools and equipment for trade. The employer also ensures
that the tools provided are in good working condition. The employer meets the cost of the tools
and the maintenance costs of the tools provided.
When a worker supplies his own tools and meets the maintenance costs, he is more likely to have
a business relationship than an employment relationship. In that case, the worker is likely to be
an independent contractor. When the trade tools are not in working condition, an employee is
likely to report to his employer. The employer will be responsible for replenishing and repairing
the tools and will meet the costs.
Application:
•The Appellant provided the major tool, which was the vehicle.
•the Appellant paid for the installation and removal of the emergency brake provided by the
Payor.
•the Appellant incurred operating expenses including vehicle expenses, liability insurance, and a
driver training endorsement.
•the Appellant's vehicle expenses included insurance, maintenance, and fuel.
Profit or Risk of Loss:
A worker's financial involvement also determines whether he's involved in an
employer/employee relationship or a business relationship.
An employee does not make any profits or incur any losses. The employer bears the profits and
losses. The salaries or wages paid is not dependent on the profits or loss incurred. Employees are
mainly paid on an hourly basis and not on the work done. The salaries or wages paid remain
constant despite the changes that the employer may experience.
An independent contractor is mainly paid according to the amount of work done and not the
number of hours. The contractor can either make a profit or loss depending on his costs of
carrying out the work. The contractor bears the operating costs.
Application:
•the Appellant also received fees for new bookings, student home pickups, and a fuel subsidy.

•the Appellant incurred operating expenses including vehicle expenses, liability insurance, and a
driver training endorsement
•the Appellant's vehicle expenses included insurance, maintenance, and fuel.
Integration:
An employee's job is an integral part of their employer's business. Conversely, a self-employed
individual's tasks are less likely to be integrated into the payer's business.
An employee is not likely to work for other companies or individuals in the course of being in
employment.
He cannot take up other jobs.
An independent contractor is free to take up new contracts from different clients depending on
each contract's requirements. Since the contractor is free to determine his working hours, he can
work with different clients simultaneously if he completes each client's project as per the
contract.
The primary way of providing integration to your commercial activities is to have multiple
clients. An individual working for only one client is likely to be perceived as an employee rather
than an independent contractor.
Application:
•the Appellant had operated his own taxi business since 2001;
•the Appellant maintained his own business books and records;
Taxes:
While employers file taxes for their employees, independent contractors are obligated to declare
and file their own income taxes.
•the Appellant declared business income and business expenses on his 2017, 2018, and 2019
income tax returns.
Benefits:
While employers are obligated to provide benefits such as health insurance, retirement plans,
leave, and vacation pay, such benefits are not provided to independent contractors.
•the Appellant did not receive any employee benefits such as health, dental or vacation pay.
Payment:
Employees usually work for a specific salary that is guaranteed, while independent contractors
submit invoices for their work.
•the Appellant invoiced the Payor.
•the Payor did not guarantee the Appellant a minimum amount of pay.
Bill rates:
Independent contractors usually have a standard billing rate for their service. The rate may vary
depending on the work and service offered.
•the Appellant earned a set fee of $26 per hour.
Employment contract:
The contract stated that Mr. Bourne was an independent contractor and not an employee.
• the Appellant entered into a written contract with the Payor which stated that the Appel-lant
was a contractor and not an employee.
Based on the above analysis, Mr. Bourne was an independent contractor.

Assignment problem 3-5:

Minimum taxable benefit for each executive:
Name:
MS Bambi Caplan
Car provided:
BMW 300 Series
Lease rent = $650 per month
For the year = 7800
Total kilometer driven
= 57000
Employment related = 21000 kms
Personal use = 36,000 kms
Operating cost = 11,300
Company recovers = 2400 (200*12) per year from Bambi should be reduced from the operating
cost
Net operating cast = 11300-2400
= 8900
Proportionate cost for personal use
=8900x36000 kms
= 57000 kms
Name:
Sheldon Caplan
Car provided:
Lexus GS
Lease rent -51100 per month
Total kms driven - 34,300 kms
Employment related - 32,600 kms
Personal use- 1600 kms

Operating cost - 0.28 per kms

Operating cost for personal use
1600 x 0.28 = 448

Car available for 8 month with sheldon

Proportionate charge of operating cost
448 x 8
=3584

Name:
Ms Melissa Caplan
Car provided:
Mercedes 5 Class Sedan
Car driven - 62000 kms
Employment related - 23000 kms
Person use - 39000 kris
Operating cost - 27,500
Car available with Melissa for 11 months
Proportionate cost
= 27,500x 39000 kms x 11
= 62000 x 12
=744000

Name:
Mr. Jerome Caplan
Car provided:
Audi A5
Car driven -93000 kms
Employment related -69000 kms
Personal use- 24000 kms

Operating cost - 19400

Car available with Jerome =10 months
Proportionate cost
= 24000x19400x10
93000x12
=600744.194