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for posting_soln_ACCT446_Chap 13_Quiz - Chap 13 Quiz This...

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Chap 13 Quiz This question deals with subsection 15(2) and sections 80.4 and 80.5 of the Act. Tax consequences for 2010: (i) House loan Par. 15(2.4)( b ) would exempt the principal amount of this loan from income since Pauline is also an employee, the purpose of the loan was to purchase a house for her occupation, she received the loan in her capacity as an employee (under corporate policy) and bona fide arrangements were made for repayment of the loan within a reasonable time. Sec. 80.4 would include an interest benefit on an employee loan for 2010 as shown in the calculation below. Since Pauline received the loan by virtue of being an employee, the calculation of the imputed interest benefit would be made under subsection 80.4(1) at the prescribed rate of interest in effect throughout the year. Ssec. 80.4(4), the prescribed rate protection rule, also applies to benefits calculated under ssec. 80.4(1). However, the 6% rate to be applied would result in a larger benefit.
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