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Case 4 - Allowances & Expenses (7 Marks)
Dale & Donna Becker are both sales people working for a large
pharmaceutical company with a branch office in North Bay.
Due to their expertise, the company has asked them to relocate to Toronto as
soon as possible. They have been given an allowance of $10,000 to
compensate them for any inconvenience.
The following items have been diarized to date by Dale & Donna as they
relate to their move over the past two weeks;
Travel expenses (mileage at prescribed rates)
$975
Temporary living expenses - 12 days
$2,500
Renovations to new residence
$7,500
Lease cancellation of old residence
$4,000
Legal/agent fees (for both old & current premises)
$1,800
Transportation & storage of household items,
$2,900
Incidental costs (ie, disconnection of cable, etc.)
$325
Based on the above information;
a)
Indicate which item(s) above are NOT eligible under the Income Tax
Act. Further, what additional expenses could be considered as
eligible? (Hint: reference a TI-M form to complete this question)
b)
What minimum condition(s) does CRA indicate must be met, when
employers are compensating employees for moving expenses?
c)
Assuming that they retain receipts for all their eligible expenses,
what would Dale & Donna have to evaluate with regard to any
personal income tax consequences on the $10,000 advance?
EXPLAIN your response and JUSTIFY it numerically.

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