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Unformatted text preview: Sample Problems 1. Employment Income Mr. Samuel Kern is an administrator for a publicly traded Canadian manufacturing company . His gross salary for the year ending December 31, 2009 is $67,600. For the 2009 taxation year, Mr. Kerns employer withheld the following amounts from his income: Federal Income Tax $11,200 Employment Insurance Premiums 711 Canada Pension Plan Contributions 2,049 Registered Pension Plan Contributions 1,800 Contributions To Group Disability Plan 175 Mr. Kerns employer made a matching contribution of $1,800 to his registered pension plan and a $175 matching contribution for the group disability insurance. Other Information : 1. During 2009, Mr. Kern is provided with an automobile that has been leased by his employer . The lease payments are $ 815 per month, an amount which includes all taxes and an $89 monthly payment for insurance . The total operating costs of the car were $4,600 for the year and they were paid by the employer. The car is available to him for nine months of the year and he drives it a total of 32,000 kilometers . Of this total, 29,000 kilometers were for travel required in pursuing the business of his employer and the remainder was for personal use. He reimbursed his employer $50 per month of use for his personal use of the automobile. 2. During 2009, Mr. Kern was hospitalized for a period of three weeks. The disability plan provided him with benefits of $1,650 during this period . Mr. Kern began making contributions to this plan in 2008 at the rate of $175 per year. 3. Mr. Kern was required to pay 2009 dues to his professional association in the amount of $1,233. 4. In 2006, Mr. Kern was given options to buy 200 shares of his employers stock at a price of $75 per share . At the time the options were issued, the shares were trading at $70 per share . On June 1, 2009 Mr. Kern exercises the options. At the time of exercise, the shares are trading at $83 per share . He does not make the election to defer the income inclusion from the exercise of the stock options and is still holding the shares on December 31, 2009. Required : Calculate Mr. Kerns minimum net employment income for the year ending December 31, 2009 . Provide reasons for omitting items that you have not included in your calculations. Ignore all GST considerations. 1. NET EMPLOYMENT - SUGGEST ED SOLUTION FORMAT Mr. Kerns net employment income for the year would be calculated as follows: Gross Salary $67,600 Plus: Taxable Items: Automobile Benefit (See Note One ) 857 Disability Insurance Benefit (See Note Two) 1,300 Stock Option Benefit [($83 - $75) (200)] 1,600 Less: Deductible Items: Registered Pension Plan Contributions (1,800) Professional Dues (1,233) No impact Items: Employer Contributions to Registered Pension Plan Nil Employer Contributions to Group Disability Plan...
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This note was uploaded on 01/24/2011 for the course ACCO 330 taught by Professor Mastromonaco during the Fall '10 term at Concordia Canada.
- Fall '10