COMM_Midterm_May_2012_%28questions%29-sample

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STUDENT’S LAST NAME________________________ FIRST NAME:_____________________ STUDENT #:______________________________ ********************************************************************************** BUSI 355 Introduction to Income Tax Mid-Term Examination ***QUESTION BOOKLET*** June 1 st , 2012 Instructor: Tran Chung Total Marks: 40 Time: 180 minutes This examination booklet consists of 9 pages including this cover page. 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 the ANSWER booklet. 1
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PART ONE: Multiple Choices – DELETED. PART TWO – Question 1 (12 marks) Ivanna Kiltran, VP of Tax 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 2011. Salary………..………………………………….…………..……$100,000 Bonus (note 1) .................................................................................. 62,000 Payroll deductions: Income taxes………………… ........................ $60,000 Registered pension plan contributions (note 2)..10,000 Canada Pension Plan premiums….……………..2,218 Employment insurance………………………… .... 787 Union dues ........................................................... 3,000 Group accident disability insurance premiums…...110 (76,115) Net pay……………………………………………………...…. $85,885 Note 1: The bonus was declared and earned in 2010; however, it was paid on March 15 th , 2011. The bonus was not referenced to sales made or contract negotiated. Note 2: Nart matched the RPP contributions of $10,000 made by Ivanna. Nart required Ivanna to pay for certain employment related expenses described below and completed the T2200. Additional Information 1. Due to an airplane accident while flying back from Thunder Bay on business, Ivanna was seriously injured and confined to a hospital for two full months during 2011. As her employer provides complete group disability insurance coverage, she received a total of $4,200 in payments during this period. All of the premiums for this insurance plan are paid by the employer. She also sued the airline and received damages in the amount of $25,000 and a lifetime upgrade to first class certificate from the airline valued at $21,000. 2. Ivanna is provided with a car that the company leases at a rate of $678 per month. Nart provided Ivanna with a monthly gas allowance of $500, and in exchange, Ivanna assumes all of the operating costs of the car and these amounted to $3,500 during 2011. Ivanna drove the car a total of 35,000 kilometers during 2011, 30,000 kilometers of which were carefully documented as employment related travel. While she was in the hospital (see Item 1), the car and its keys were left with her employer.
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