Ch.3- Employment Income Flashcards Preview

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Flashcards in Ch.3- Employment Income Deck (11):
1

Stock options

Total income to account for: POD on sale VS original price of shares

Total income incl:
1. Employment income = (FMV at exercise -price paid for shares X sh’s

If sold:
2. Capital gains/loss= proceeds on sale to 3rd party - FMV at exercise X shs

2

Stick options - 3 transactions

1.granting

2. Exercise of the option (purchase)

3. Sale of share

3

Stock options CCPC

Employment inclusion occurs same time shares disposed

Granting- no tax
Exercise: tax deferred

Sale:
Exercise and sale taxed

Inclusion:
(@ selling date) BOTH CALCULATIONS
=
Emp inc: #sh’s x (FMV of shs option price)

CG/CL: #shs sold x( POD - FMV shs at exercise)
* not incl bc CG not Enployment inc*


X1/2

4

Stock options: public company

Inclusion:
@exercise date:
#shs exercised x (FMV of shs when exercised -option price )


@selling date:
CG/CL: #shs sold X ( POD - FMV is shs at exercise date )
*not included bc CG not employment income*

X1/2

5

Automobile standby charge : index

A: lesser of
1. Total personal use ins driven during period
2. Venue determined for B during days auto available

B: 1667km x ( total available days/30) -> if A= B , A/B=0

C: full original cost of employer owned vehicle incl HSTV

D: (total available days employer owned automobile / 30)

E: lease pmts incl HST made by employer

F: portion of lease pmts that pertains to insurance for loss/damages

6

Auto stand by charge: Employer owned car formula

A/B X (2% X (C X D)

7

Auto stand by charge: Employer LEASED car:

A/B x (2/3 (E-F) )

8

Auto benefits: operating costs benefit

- for personal use of employer owned auto , if paid by employer = taxable benefit

Km method:
personal use 50% +
Pers km X 0.25 prescribed rate

Biz use 50% +
= 50% of reduced stand by charge



9

Allowance

A taxable benefit

10

Reimbursement

Generally not a taxable benefit

11

Taxable benefit:

Creates inequity between taxpayers

Offered solely for personal enjoyment

All expense paid trips taken for pleasure