COMM_Midterm_Sep_2012%28solutions%29

COMM_Midterm_Sep_2012%28solutions%29 - STUDENTS LAST NAME...

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STUDENT’S LAST NAME________________________ FIRST NAME:_____________________ STUDENT #:______________________________ SECTIONS: 101 (1:00pm) 102 (2:30pm) 103(4:00pm) BUSI 355 (Wed 6:30PM) Sauder School of Business THE UNIVERSITY OF BRITISH COLUMBIA COMMERCE / BUSINESS 355 Introduction to Income Tax Mid-Term Examination ***ANSWERS BOOKLET*** October 31 st , 2012 Instructor: Tran Chung Total Marks: 40 Time: 180 minutes This ANSWER BOOKLET consists of 17 pages including this cover page, schedule 8. 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. A 4. B 5. D 6. C 7. C 8. B 9. C 10. B 2
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PART TWO – Question 1 (12marks) Calculate Ivanna’s minimum net employment income inclusions for 2012 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, 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 2012. 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 2011; however, it was paid on March 15 th , 2012. 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. Salary Bonus RPP contribution (deductible under 8(1)(m)) Union dues (deductible under 8(1)(i)) Income tax, CPP, EI and group disability insurance are not deductible. RPP contribution made by Nart is not a taxable benefit under 6(1)(a) 100,000 62,000 (10,000) (3,000) 149,000 3
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1. Ivanna is provided with a car that the company purchased for $45,000. The car is placed in class 10.1 with an ending undepreciated capital cost of $25,500.
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