Emoloyee Loans Case
Donald Fair, a Vancouver resident, is negotiating his compensation for 2013 with Association Ltd. And was offered the following compensation package:
• Salary of $80,000
• Monthly Car Allowance of $200. At year end, Donald determined that he incurred $4,000 in vehicle operating expenses that related to employment activities.
• $100 Gift Card
• 2 Fleece Vest with a total value of $75
• On April 1, 2013, the Company provide an interest free loan of $45,000. The market rate was at 4%.
Calculate Donald's Net Income For Tax Purposes and Taxable Income pursuant to Section 3 for 2013 assuming:
a) The loan proceeds used to purchase a vehicle exclusively for employment purposes
b) The loan proceeds used to purchase an art collection for personal enjoyment
c) The loan proceeds used to purchase a home in Vancouver
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