90.2K

Verified Solution

Link Copied!

Mailings Review rences View y =,=,=! Abcode Abbcode ~ Ao AaBBCCDC ABCEDE AaBb. Normal No Spacing Heading TE Heada2 V V A 10 16 LLL Ms. Nancy Drew was an insurance specialist in toronto, specializing in the pricing or insurance products across Canada. In 2020, Nancy was approached by an insurance company (ABC Inc.), a public company, in Victoria, B.C. that was in need of someone to lead their pricing team. When ABC offered her a position in October, 2020 with a start date of January 1, 2021, she immediately accepted. Her home in Toronto had cost her $525,000, but she ended up selling it for $390,000 in February 2021, resulting in a $135,000 loss on the property. Other Information: Other information relevant to 2021 is as follows: I 1. ABC owned a suite hotel and offered her the use of a unit there at a rate of $2,000 per month. The regular monthly rate for the unit was $5,000 per month. She moved in on January 1, 2021. She eventually finds a home in Victoria that she purchases on May 15, 2021 for $1,600,000. After doing extensive renovations, she moves out of the hotel and into her house on July 1, 2021. 2 As an incentive to accept the position, ABC agreed to compensate her for one-half of any loss on the sale of her Toronto home. The $67,500 [(1/2X$135,000)) payment was made on May 30, 2021. 3. In order to help Nancy with the purchase of her new townhouse, ABC provided her with a $100,000 interest free housing loan. The funds are provided to Nancy on May 1, 2021. Assume that them prescribed rate for all of 2021 is 2 percent and the loan is still outstanding at the end of the year. 4. During 2021, Nancy received a salary of $175,000. This included several large bonuses. The Company withheld the following amounts from her salary: Income Taxes $53,000 RPP Contributions $2,500 5. ABC contributed $2,500 on Nancy's behalf to the Company's RPP. 6. ABC provides group medical coverage to all of its employees. The private health plan premiums paid by ABC on Nancy's behalf cost $1,115 for the year. 7. During the year, Nancy received one non-cash gift from ABC, a spa pass worth $1,200. 8. Nancy was granted options to buy 100 of the company's shares at $100 per share when she joined the staff of ABC. At that time, the shares were trading at $94 per share. On May 10, 2021, the shares are trading at $123 per share. She acquires 50 shares for cash of $5,000 on that date. She is still holding these shares on December 31. States) 5 Part A (13 marks) Calculate Nancy's net employment income, indicating the inclusions and deductions. If an item listed above is not included or deducted, explain why. I Part B (4 marks): How would your answer to Part A change in cach of the following independent situations? Just explain the change for each item below, do not redo all calculations in Part A. If there is no change, just indicate "no change": 1) ABC Inc was a Canadian Controlled Private Corporate (CCPC). 11) Nancy paid $500 of interest relating to the housing loan to ABC Inc on January 19, 2022. The housing loan was made to Nancy's spouse. Mailings Review rences View y =,=,=! Abcode Abbcode ~ Ao AaBBCCDC ABCEDE AaBb. Normal No Spacing Heading TE Heada2 V V A 10 16 LLL Ms. Nancy Drew was an insurance specialist in toronto, specializing in the pricing or insurance products across Canada. In 2020, Nancy was approached by an insurance company (ABC Inc.), a public company, in Victoria, B.C. that was in need of someone to lead their pricing team. When ABC offered her a position in October, 2020 with a start date of January 1, 2021, she immediately accepted. Her home in Toronto had cost her $525,000, but she ended up selling it for $390,000 in February 2021, resulting in a $135,000 loss on the property. Other Information: Other information relevant to 2021 is as follows: I 1. ABC owned a suite hotel and offered her the use of a unit there at a rate of $2,000 per month. The regular monthly rate for the unit was $5,000 per month. She moved in on January 1, 2021. She eventually finds a home in Victoria that she purchases on May 15, 2021 for $1,600,000. After doing extensive renovations, she moves out of the hotel and into her house on July 1, 2021. 2 As an incentive to accept the position, ABC agreed to compensate her for one-half of any loss on the sale of her Toronto home. The $67,500 [(1/2X$135,000)) payment was made on May 30, 2021. 3. In order to help Nancy with the purchase of her new townhouse, ABC provided her with a $100,000 interest free housing loan. The funds are provided to Nancy on May 1, 2021. Assume that them prescribed rate for all of 2021 is 2 percent and the loan is still outstanding at the end of the year. 4. During 2021, Nancy received a salary of $175,000. This included several large bonuses. The Company withheld the following amounts from her salary: Income Taxes $53,000 RPP Contributions $2,500 5. ABC contributed $2,500 on Nancy's behalf to the Company's RPP. 6. ABC provides group medical coverage to all of its employees. The private health plan premiums paid by ABC on Nancy's behalf cost $1,115 for the year. 7. During the year, Nancy received one non-cash gift from ABC, a spa pass worth $1,200. 8. Nancy was granted options to buy 100 of the company's shares at $100 per share when she joined the staff of ABC. At that time, the shares were trading at $94 per share. On May 10, 2021, the shares are trading at $123 per share. She acquires 50 shares for cash of $5,000 on that date. She is still holding these shares on December 31. States) 5 Part A (13 marks) Calculate Nancy's net employment income, indicating the inclusions and deductions. If an item listed above is not included or deducted, explain why. I Part B (4 marks): How would your answer to Part A change in cach of the following independent situations? Just explain the change for each item below, do not redo all calculations in Part A. If there is no change, just indicate "no change": 1) ABC Inc was a Canadian Controlled Private Corporate (CCPC). 11) Nancy paid $500 of interest relating to the housing loan to ABC Inc on January 19, 2022. The housing loan was made to Nancy's spouse

Answer & Explanation Solved by verified expert

See Answer