Question 6 (62 minutes) [Chapter 3]

Ms. Emm Tax is employed as an internal auditor of Uncle Stan's Enterprises Limited, a
Canadian-controlled private corporation. She is provided with a car owned by the corporation to
allow her to travel to the various plants and offices of the firm. An amount is withheld from her
salary for the personal use of the car, which amounts to 30% of the 30,000 total kilometres driven
in the year. On her auditing trips, she is away for a minimum of five days. Ms. Tax is considered
to be a “key employee” and receives various benefits, including stock options.

Ms. Tax presents you with a shopping bag full of receipts and notes written on scraps of paper
from which you develop the following information for the year 2022.

Net salary $84,744

Withholding by employer from salary
Income tax $42,000
Registered Pension Plan 8,400
Canada Pension Plan (enhance portion is $461) 3,500
Employment Insurance 953
Group term life insurance 750
Group disability insurance (40% of total premium) 400
Payment for personal use of company car 2,100 58,103
Total gross salary $142,847
Travel allowance paid by employer $ 8,100
($135 per day for 60 days; actual reasonable travelling expenses for 2022 were
$10,665, consisting of $2,400 for meals, $4,400 for accommodation, and $3,865
for air and ground transportation)
Book value of company-owned automobile 31,280
(original capital cost in November 2021 of $32,000, plus 13% HST; capital cost
allowance claimed by company in 2022 of $4,950; operating costs paid by
employer for 2022 of $9,575, including HST)
Payment received from group disability plan while disabled by falling off a loading dock
while counting inventory 3,750
(she paid premiums of a total of $1,200 since commencing employment in 2018
and she has not received benefits previously)
Employer contributions
Group term life insurance policy Premium 450
Group disability insurance plan (60% of premium) 600
Liberty Health extended medical insurance premium 900
Registered Pension Plan 8,400
Proceeds received from sale of 100 shares of stock (representing less than 1% of all shares)
acquired under the employee stock option plan at an option price of $10 per share 1,500
(when she was granted the option in 2018, the fair market value of the stock was
$12; when she exercised the option in 2018, the fair market value was $13)
Fees paid by company for University of Waterloo correspondence course in philosophy
taken on Ms. Tax's own initiative on her own time 950
Donation to Lower Taxes Party of Canada, a registered political party 100
Premium paid by Ms. Tax on personal whole life insurance policy 500
Membership fees paid by Ms. Tax to athletic club 900
Interest received on Canada Savings Bonds purchased through payroll savings plan 200
 Birthday gift paid in cash under company policy and deducted by employer 200
Cost (including all taxes) to company of her eating lunch once per month in the
executive dining room at no charge 300
Interest paid to company on a $10,000 loan for unanticipated expenses; the loan was
outstanding throughout 2022 at a rate of 1% 100
(assume that the prescribed rates for 2022 are: 2%, 3%, 4%, and 3% for the first,
second, third, and fourth quarters, respectively)
Value of internal auditor's required uniform consisting of green eyeshade, elastic
armbands, white blouse, and dark grey suit (three sets), all tastefully monogrammed
with the firm's logo and provided by the company 2,700
Premium paid by Ms. Tax for Liberty Health private dental insurance 500
Dues paid by Ms. Tax to the Institute of Internal Auditors, a professional body
recognized by legal statute 450
Gain on sale of shares purchased as a result of a stock tip given by Uncle Stan who was
told by a friend that Underground Airways stock was about to take off 1,200
Bonus payable on December 31, 2022 but not paid to Ms. Tax until January 2023 4,000
Expenses paid by company for Ms. Tax's husband who accompanied her on an auditing
trip to Moosonee 2,050

Required:

(A) Determine the amount of Ms. Tax's income from employment for 2022. Show all aspects of
the required calculations, whether or not necessary to the final answer.

(B) Briefly comment on why you consider any of the above amounts to be inapplicable to the
calculation. Be sure to comment on all items not used in your computation of employment
income.