BUSI-COMM Midterm May 2009 Solutions

BUSI-COMM Midterm May 2009 Solutions - STUDENT NAME_...

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STUDENT NAME__________________________ STUDENT #:______________________________ Sauder School of Business THE UNIVERSITY OF BRITISH COLUMBIA BUSINESS 355 Introduction to Income Tax Mid-Term Examination ***ANSWERS BOOKLET*** May 30 th , 2009 Instructor: Tran Chung Total Marks: 40 Time: 180 minutes This ANSWER BOOKLET consists of 16 pages including this cover page, schedules 8 and 10. Financial calculators can be used during this examination. Allocate your time carefully and clearly explain your analysis. The Income Tax Act is permitted to be used during exam (tabbed with name of provision, underlined, or highlighted, but no other notations or writings). Assume all persons are Canadian resident unless specifically stated otherwise. You CANNOT ask any questions during the exam. If there are any omissions or errors, please state them clearly and make the appropriate assumptions that you feel are necessary to complete the answer. Please answer all questions in this answer booklet. 1
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Part One: Multiple Choice (10 questions, 1 mark each – TOTAL 10 marks) ***FINAL ANSWER MUST BE IN PEN AND IN CAPS*** Question Answer 1. B 2. C 3. C 4. C 5. B 6. D 7. C 8. A 9. B 10. D 2
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PART TWO – Question 1 (12marks) Calculate Ivanna’s minimum net employment income inclusions for 2008 in accordance with the provisions of the Income Tax Act. NET EMPLOYMENT INCOME (If required, please use the following page to show additional work). Subtotal Total Ivanna Kiltran, Vice President of Sales at Nart Inc. (“Nart”), a Canadian controlled private corporation, has asked your assistance concerning the tax implications of certain amounts and benefits she received from her employer, Nart, during 2008. Salary………. .………………………………….…………. .……$100,000 Commissions. .................................................................................... 62,000 Payroll deductions: Income taxes…………………. ..................... $60,000 Registered pension plan contributions. ............ 10,000 Canada Pension Plan premiums….……………2,049 Employment insurance…………………………. .711 Group accident disability insurance premiums….110 (72,870) Net pay………………………………………………………. $89,130 Nart matched the RPP contributions of $10,000 made by Ivanna. Tax treatment (if any) of the above opening paragraph: Salary Commission RPP made by employee deductible under 8(1)(m) Income tax, CPP, EI and disability premiums not deductible RPP contribution made by employer not taxable 100,000 62,000 (10,000) 3
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1. In November of 2008, Ivanna was in a skiing accident and was unable to work for four weeks. During this period she received disability payments totalling $1,600 from Paris Life Insurance Ltd. Half of the disability insurance premiums were paid by Nart Inc. and half by Ivanna (see payroll deduction above). Ivanna has paid a total of $350 in disability insurance premiums since she commenced employment at Nart Inc. in 2005.
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This note was uploaded on 11/03/2010 for the course COMM 355 taught by Professor Trancheung during the Winter '10 term at The University of British Columbia.

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BUSI-COMM Midterm May 2009 Solutions - STUDENT NAME_...

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