Question

Question 2 (10 Marks)

Cole’s Construction Ltd. provided a car to Marie Landry for her use in carrying out her employment duties. Marie Landry was given full possession of the car and was allowed to use it for personal needs. However, when she was not using the car for employment/personal activities, the car had to be returned to Cole’s Construction Ltd.’s premises, so that it could be used by other employees.

The car was purchased in 2018 for $ 66,000. During 2018 and 2019, Cole’s Construction Ltd. claimed maximum CCA.

During 2019, Marie Landry drove the car 60,000 kilometres, and Cole’s Construction Ltd. paid for all of the operating costs, which totalled $ 14,000.

Case A: Marie Landry had use of the car for 9 months of the year. Personal use during 2019 totalled 3,000 kilometres.

Case B: Marie Landry had use of the car for 7 months of the year. Personal use during 2019 totalled 22,000 kilometres.

Case C: Marie Landry had use of the car for 10 months of the year. Employment use during 2019 totalled 6,000 kilometres.

Required:

Ignore all GST/PST/HST implications. Calculate the minimum taxable benefit that would be allocated to Marie Landry in each of the preceding cases.

Answer 1

Case A
	14000	x 3000 x    9	= $525
	60000	12

During the year 2019 Marie Landry uses car wholly and exclusively for personal purpose. So actual expenses and inward the employer on the income is taxable.

Case B	14000	x 22000 x 9	= $2,994
	60000	12

If the car is used for only personal purpose it will be fully taxable irrespective of cubic capacity engine.

Case C	14000	x 6000 x   10	=$1,167
	60000	12

If the car is used for only official purpose, it will not be taxable in th hand of employee irrespective of cubic capacity engine.