Issuu

CHAPTER 1 1) Which of the following is not considered to be a separate entity for tax purposes in Canada? A) An individual B) A proprietorship C) A corporation D) A trust

2) Which of the following attitudes and actions is most likely to help decision-makers develop an efficient approach to taxation? A) Cash flows should be considered from a before-tax perspective when making decisions. B) Functional managers should not be held responsible for the tax effects of decisions within their divisions. C) Tax costs to a business should be regarded as controllable expenses, much like product costs and selling costs. D) All managers should own a copy of the Income Tax Act.

Which of the following statements is true?

A) Dividends paid by a corporation are deductible by that corporation and are a form of property income for the recipient. B) Dividends paid by a corporation are deductible by that corporation and are a form of business income for the recipient. C) Dividends paid by a corporation are not deductible by that corporation and are a form of business income for the recipient. D) Dividends paid by a corporation are not deductible by that corporation and are a form of property income for the recipient.

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4) When assessing the value of a corporation, the most relevant information that decisionmakers normally consider is A) the potential for before-tax profits. B) the potential for after-tax profits. C) the current corporate tax rate. D) cash flow before-tax.

Income tax is calculated for which of the following jurisdictional groups? A) Municipal, provincial, and federal B) Municipal, federal, and foreign C) Provincial, federal, and foreign D) Municipal, provincial, and foreign

Two investor corporations may not enter jointly into which of the following? A) Joint venture B) Partnership C) Separate corporation D) Proprietorship

Which of the following statements is true?

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A) Cash flow should never be calculated on an after-tax basis. B) The tax cost to a business should be regarded as a cost of doing business. C) Income tax cannot be treated as a controllable cost. D) The value of an enterprise should be based on pre-tax cash flow.

8) Logan holds a 7% interest-bearing debt instrument in Glow Co. Glow Co.'s tax rate is 27%, and Logan is in a 45% tax bracket. Which of the following statements is correct? A) The after-tax cost of the debt instrument is 5.11% to Glow Co., and the after-tax value to Logan is 3.85%. B) The after-tax cost of the debt instrument is 5.11% to Glow Co., and the after-tax value to Logan is 3.15%. C) The after-tax cost of the debt instrument is 1.89% to Glow Co., and the after-tax value to Logan is 3.15%. D) The after-tax cost of the debt instrument is 7% to Glow Co., and the after-tax value to Logan is 7%.

9) Which of the following lists accurately names the five general income categories for tax purposes? A) Business, Interest, Employment, Capital Gains, Other B) Business, Property, Employment, Capital Gains, Foreign C) Business, Property, Employment, Capital Gains, Other D) Business, Property, Employment, Investments, Other

10) Proprietorships, corporations, partnerships, limited partnerships, joint ventures, and income trusts are all

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A) categories of income for tax purposes. B) tax jurisdictions. C) examples of financial instruments. D) forms of business.

11) true?

Which of the following statements regarding taxation within jurisdictions in Canada is

A) Federal and provincial or territorial tax brackets are always identical to one another. B) Only federal taxes apply to individuals while both federal and provincial or territorial taxes apply to corporations. C) Both federal and provincial or territorial taxes apply to Canadian taxpayers. D) Only federal taxes apply to corporations while both federal and provincial taxes apply to individuals.

12) Jamie is an employee at ABC Ltd. and is in a 45% tax bracket. ABC Ltd. has a tax rate of 27%. The company has offered Jamie a 10% pay raise. Jamie's current salary is $50,000. What is after-tax cost of the raise to ABC Ltd.? A) $1,350 B) $2,750 C) $2,858 D) $3,650

13) Simone is an employee at XYZ Ltd. and is in a 45% tax bracket. XYZ Ltd. has a tax rate of 27%. The company has offered Simone a 10% pay raise. Simone's current salary is $50,000. What is after-tax value of the raise to Simone?

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A) $1,350 B) $2,250 C) $2,750 D) $5,000

14)

All cash flow must be considered on an after-tax basis because

A) companies want a positive cash flow. B) the value to a business must be considered. C) the investor's tax rate is irrelevant. D) decisions that appear favourable on a pre-tax basis may be unfavorable or marginally favourable on an after- tax basis.

15)

Which of the following is not a separate entity for tax purposes? A) Corporation B) Trust C) Partnership D) Individual

16)

The Canadian income tax system for individuals is considered A) progressive. B) regressive. C) flat. D) unfair.

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17)

What is the most significant form of taxation that affects return on investment? A) Property Taxes B) Excise Taxes C) Income Taxes D) All taxes

18) QWERTY Co. decides to give a 6% raise to its employee Jean, who is currently in the 40% tax bracket. The company is in the 27% tax bracket. What is the after-tax implication for each of the parties in this transaction? A) The company has a net after-tax cost of 4.38% and Jean has an after-tax income of 3.6%. B) Both Jean and the company have a 3% after-tax cost/benefit. C) We should only consider the pre-tax amount of 6% to each party. D) Both the company and Jean have an after-tax cost of 4.38%.

19) Explain what is meant by the statement that "tax should be treated as a ‘controllable cost'."

20) Blake holds a 5% interest-bearing debt instrument in Day Co. Day Co.'s tax rate is 27%, and Blake is in a 50% tax bracket. Required: A) Calculate the after-tax cost (as a percentage) of the debt-instrument to Day Co. B) Calculate the after-tax value (as a percentage) of Blake's interest income.

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CHAPTER 3 1) Fran is a Canadian citizen. In March of this year, Fran's employer transferred Fran to the United States. Fran's spouse and child moved with Fran at that time. Fran chose not to sell the family's home, and instead, now lends it to extended family from overseas during the winter months. Fran has five weeks of vacation each summer, at which time the family returns to Canada and stay in their house. Fran did not cancel a long-standing country club membership, nor did they close the family's Canadian bank accounts. Which of the following statements is true? A) Fran is a Canadian citizen, and will therefore, automatically be considered a Canadian resident for tax purposes. B) Fran no longer resides in Canada, and will therefore, automatically be considered a non-resident of Canada. C) Fran is considered a part-time resident of Canada for the five weeks that Fran and family vacation in the country. D) If Fran is considered to have a continuing state of relationship with Canada, Fran might be a resident for tax purposes.

2) Of the following individuals, which would be considered a part-year resident of Canada for the 2022 taxation year? A) John lived in Canada all of his life prior to moving to Germany in 2022, where he was assigned to a seven-month assignment to set up the international operations for his Canadian employer. He did not sell his home on Vancouver Island, as his spouse and children remained in Canada for work and schooling reasons. B) Marie is a Swiss citizen who lived in Canada from February to October of 2022. While in Canada, Marie joined the local fitness club, gained part-time employment, and opened an account in a Canadian bank. C) Prasham is a citizen of India, where he lived his entire life prior to moving to Canada on April 30th, 2022. Upon arriving in Canada to begin his new career, he began full-time work and purchased a home. D) June moved to Canada three years ago from the United States, maintaining American citizenship.

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Section 3(a) of the Income Tax Act includes which of the following? A) Income from: employment, property, and capital transactions B) Income from: employment, property, business, and capital transactions C) Income from: business, other items, and capital transactions D) Income from: employment, property, business, and other items

4) Which of the following may be exempt from Canadian withholding tax when paid to a non-resident? A) Dividends B) Interest paid to an arm's-length party C) Pension benefits D) Registered retirement income fund payments

Regarding taxation years, which of the following statements is TRUE?

A) All corporate taxpayers must use the calendar year as their taxation year. B) The taxation year for an individual taxpayer typically ends on April 30th. C) Individual taxpayers may choose any twelve-month period as their taxation year. D) A corporation may have a taxation year less than twelve months during a year the corporation is formed, dissolved, or is granted a change in its year-end.

With regards to the taxation year, which of the following situations is correct?

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A) An individual taxpayer's taxation year ends on April 30th. B) A corporation's taxation year is its fiscal period not exceeding 52 weeks. C) Corporations must use December 31st as the taxation year end. D) Taxation year ends must be considered for tax planning purposes within business structures.

The category of ‘Other Income' includes A) employment income. B) capital gains and losses. C) lottery winnings. D) pension benefits.

8) During the year Mackenzie had employment income of $40,000, property income of $3,000, a business loss of $22,000, an allowable business investment loss of $5,000, income from an RRSP withdrawal of $2,000, and a capital loss of $40,000 on the sale of shares in a public corporation. How much is Mackenzie's net income for tax purposes in accordance with Section 3 of the Income Tax Act? A) $0 B) $18,000 C) $20,500 D) $23,000

9) During the year Marija had employment income of $50,000, property income of $5,000, a business loss of $12,000, income from an RRSP withdrawal of $3,000, and a capital loss of $30,000 on the sale of shares in a small business corporation. How much is Marija's net income for tax purposes in accordance with Section 3 of the Income Tax Act?

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A) $0 B) $16,000 C) $31,000 D) $46,000

10) During the year Jungkook had employment income of $30,000, property income of $1,000, a business loss of $2,000, income from an RRSP withdrawal of $2,000, and a capital gain of $30,000 on the sale of shares in a small business corporation. How much is Jungkook's net income for tax purposes in accordance with Section 3 of the Income Tax Act? A) $1,000 B) $31,000 C) $46,000 D) $61,000

11) Sami moved to Europe on August 15th, 2022, to open and incorporate a café in a small European village. Prior to moving, Sami’s only income for 2022 was a salary of $55,000. Sami did not own any assets prior to moving. Sami severed all other ties to Canada prior to moving. What is the residency status for Sami in 2022 for Canadian tax purposes? A) Sami is a full-time resident for all of 2022. B) Sami is a sojourner in 2022. C) Sami is a non-resident for all of 2022. D) Sami is a part-year resident in 2022.

12)

With respect to residency of corporations, which of the following is correct?

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A) The determination of residency for corporations is usually more complex than determining residency for individuals. B) Corporations that are incorporated in Canada are considered residents of Canada regardless of where the controlling shareholders reside. C) Corporations that are incorporated in Canada are considered residents of Canada only if the controlling shareholders reside in Canada. D) Corporations that are incorporated in Canada will be classified as non-resident if the controlling shareholders reside in a foreign jurisdiction.

13) When there is a conflict between the Income Tax Act and international tax treaties, what must be attended to first? A) The Income Tax Act B) International tax treaties C) Whichever appears to be fairer to the taxpayer D) Provincial/territorial income tax law

14) A taxpayer operates a business as a member of a partnership. How will income earned in the partnership be taxed? A) The partnership will be taxed on the income and each partner will be taxed on any salary taken. B) Each partner will be taxed on the share of net income according to the partnership agreement. C) The partnership will be taxed on net profit only. D) Each partner will be taxed on withdrawals taken during the year.

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15) Aaliyah, along with her spouse and children, have lived in Canada all their lives. In April of the current year, Aaliyah receives a job offer which requires her to move to the US. She decides to move on April 10th but her spouse and children remain in Canada until June 27th. They move to the US on June 27th and it takes until July 15 to find a suitable home for them in the U.S. When does Aaliyah's residency in Canada end? A) April 10, the day Aaliyah moves out of Canada B) June 27th, when the family joins Aaliyah C) July 15th when the family finds a new home in the U.S. D) They are all deemed residents for the entire year.

16) ABC Co. was incorporated in Canada in 2015, however, it never did business in Canada. It had a permanent establishment in the US only. How will ABC be taxed? A) Taxed in Canada on its Canadian income only B) Taxed in the US only since that is where the permanent establishment is C) Taxed in both Canada and the US based on share of income D) Taxed in Canada on its world income and given a foreign tax credit for any US taxes paid

17)

A taxpayer has an allowable capital loss of $5,000. How will it be used?

A) It may be deducted against all types of income. B) The loss may be carried back 3 years or forward indefinitely and used against taxable capital gains. C) The loss may be carried back 3 years or forward 10 years against any income. D) The loss may be carried back 3 years or forward 20 years against any taxable capital gains

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18) Fouad Jacobs moved to Canada on April 30th, 2022. Fouad was born and raised in Beirut and moved to Canada to start a career in architecture. Fouad earned $45,000 from May to December in 2022 from the architecture firm. Fouad earned $10,000 of employment income from January to March in 2022 while still living in Beirut, and also received $1,000 in dividends in March 2022 and $1,000 in dividends in September 2022 from stocks in a European corporation. Fouad's parents e-transferred $2,000 as a gift for Fouad's 25th birthday in August 2022. Required: a) Determine Fouad's residency status for Canadian tax purposes for 2022. b) How much income is Fouad required to report for the 2022 tax year? c) Explain why any items have been excluded from your calculations.

19) Answer the following questions which pertain to the administration of the Canadian Income Tax system. 1. Individuals (who do not carry on a business) must file an income tax return for the most recent calendar year by which date? 2. Individuals who carry on an unincorporated business must file an income tax return for the most recent calendar year by which date? 3. Who is responsible for the filing of a deceased taxpayer's tax return? 4. What is the taxation year for an inter-vivos trust? 5. What type of trust is permitted to choose a non-calendar year for tax purposes? 6. A trust must file an income tax return within how many days of its taxation year? 7. What is the taxation year for a corporation (other than a professional corporation)? 8. A corporation is required to file an income tax return within how many months of its taxation year-end?

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20)

The following list contains Division C deductions:

a. Charitable donations b. Employee stock option deductions c. Unused losses of other years d. Dividends from Canadian corporations e. Capital gain deduction on certain property f. Dividends from foreign affiliates Required: Sort the deductions into the appropriate columns below. (Answers may be used more than once if applicable.)

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Individual

Corporation

Net Income for Tax Purposes

Less:

= Taxable Income

4) Which of the following, when provided by an employer, is a tax-deferred or tax-free benefit for the employee? A) Premiums for private health care plans providing extended health coverage beyond a public plan B) Financial counselling services not connected to re-employment or retirement C) Group term life insurance policy D) A $200 cash gift for the employee's wedding

5) Keegan received $25,000 by way of an employee loan at a rate of 1% interest when the CRA's prescribed rate of interest was 3%. Keegan is in a 40% income tax bracket. What is the actual cost (rate) of Keegan's loan? (Assume there are no fluctuations in the prescribed rate of interest.) A) 1% B) 1.2% C) 1.8% D) 2%

6) The following pertains to the 2022 tax year. Minju is employed as a salesperson and earned a salary of $50,000 and commission income totaling $5,500. Minju is required to pay for numerous employment expenses each year which are identified on the annual T2200. Minju paid $6,200 for advertising and promotion during the year. Minju uses a personal vehicle for work purposes. The undepreciated capital cost of the vehicle was $25,000 at the beginning of the year and $320 of interest was paid per month on a loan for the car. Minju drove the car a total of 20,000 kilometres during the year. 8,000 of these were for work purposes. How much is Minju's total salesperson deduction for the year?

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A) $9,960 B) $10,057 C) $16,600 D) $17,540

7) Alex works exclusively from home as an employed salesperson for SET Co. During the year, Alex earned $21,000 from SET Co. Alex's office occupies 8% of the home's square footage. The following costs were incurred for the entire home during the year: property taxes $3,000, insurance $1,500, utilities $2,400, and mortgage interest $6,000. How much can Alex deduct for the year? A) $552 B) $1,032 C) $6,900 D) $12,900

8) An individual has the option to receive a $1,000 annual bonus and invest the after-tax amount for 25 years or receive $1,000 per annum in a registered pension plan for the next 25 years. Assuming a constant rate of return of 8% and a tax rate of 40%, what will be the total after-tax difference between the two plans? (Calculate for either as ordinary annuity) (Round intermediate calculations to nearest whole dollar.) A) The RPP will yield $16,005 more than the annual bonus. B) The annual bonus will yield $16,005 more than the RPP. C) The RPP will yield $29,242 more than the annual bonus. D) The annual bonus will yield $29,242 more than the RPP.

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9) Sven is choosing between an annual $1,000 bonus from his employer to be invested at 8% over 20 years or an annual $1,000 RPP from his employer also to be invested at 8% over 20 years. Which of the following statements is accurate? (Sven's tax rate will remain constant at 45% and all funds will be treated as ordinary annuities.) (Round intermediate calculations to nearest whole dollar.) A) Sven's accumulated funds will be greater if he selects the bonus. B) Sven's accumulated funds will be the same regardless of which option he chooses. C) Sven's accumulated funds will be greater if he selects the RPP. D) If Sven chooses the RPP, the funds will compound at a rate of 4.4%.

10) The following pertains to the 2022 tax year. Cleo is employed by ABC Inc., a public corporation. You are provided with the following information: Cleo's salary for the year was $90,000, a cash bonus of $8,000 was announced on December 3rd to be paid to Cleo on January 10th, 2023, RPP contributions of $2,000 were made by both Cleo and ABC, Cleo exercised a stock option during the year when the FMV was $5 per share (granted at $4 per share when the FMV was $3), and a $20 meal allowance was provided once a month due to the three hours of overtime that was required once a month immediately following eight hours of regular work. Which of the following is correct? A) Cleo will have a $4,000 RPP deduction from employment income. B) Cleo's meal allowance is a non-taxable benefit. C) The cash bonus is taxable in 2022. D) The stock option was granted at a price greater than the fair market value and is therefore not taxable until sold.

11) An employee received the following from their employer during a taxation year: 1) a $55,000 salary, 2) a watch valued at $200 as a birthday gift, and 3) a $15,000 low-interest loan with a 1% interest rate when the CRA's prescribed rate during the year was 3%. What is the employee's net income for tax purposes?

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A) $55,000 B) $55,300 C) $55,500 D) $55,750

12) Z Co. declares a bonus to be paid to employee Marcia during the fiscal year ended December 31, 2022. The bonus will be paid on June 30, 2023. When will Marcia claim the income? A) Marcia will claim the income in 2022 when it is earned. B) Marcia will claim the income in 2023 when it is received. C) Marcia will claim the income in 2024, the year after it is received. D) Marcia does not have to claim the income.

13) Chris does work for several clients. Chris pays for the tools used to perform assigned tasks and is responsible for scheduling the work and ensuring tasks are done on time. If Chris is late, the client invoices are reduced by 15%. How would Chris report this income? A) This is employment income, and the clients must issue T4 slips. B) Chris is an independent contractor, and this is business income. C) Chris should choose the method which will benefit him the most - employee or independent contractor. D) The clients should choose the method which will benefit them the most - employee or independent contractor.

14) During the year, Amr received the following noncash gifts from his employer: A painting worth $400 and a watch worth $250. How will these gifts be taxed?

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A) These gifts will not be taxed at all. B) The entire $650 will be reported on Amr's return. C) As noncash gifts, there is a $500 exemption and the remaining $150 will be taxed. D) The painting will not be taxed but the watch will.

15) ABC Co. provides a generous employee benefits package that includes a life insurance policy and a health and dental policy covered by a private health service plan. How will an employee be taxed if they use the benefits? A) The employee will be taxed on life insurance and health and dental benefits. B) The benefits package is not taxable since the employee would not receive funds. C) The employee will be taxed on the value of benefits used. D) The employee will be taxed on the life insurance premium but not the health benefits.

16) A taxpayer works in Windsor and travels throughout the city during their 8-hour day. They keep their receipts and deduct the value of meals because they heard that 50% of meal expense is allowed. When CRA audits this taxpayer, will the deduction be denied? A) No, since the taxpayer has receipts and was working for an employer. B) Yes, since the taxpayer was not away from the municipality for more than 12 hours. C) No, since the taxpayer deducted 50% of the costs incurred. D) No, as long as the taxpayer has other travel expenses.

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17) Kelly is a high school history teacher and a national expert in ancient ruins. In July of 2023, Kelly was hired by the local university to teach an elective course in ancient Mayan history. Kelly then conducted a field trip of the ruins in Guatemala with some of the local students from July 30th to August 10th. Kelly recruited another local expert to teach the last class that fell during the dates of the trip. Kelly earned $55,000 from the teaching job and negotiated a contract price of $5,000 to teach the university elective and $7,000 to conduct the tour. The university provided Kelly with office space during the month of July. Kelly's personal laptop and collection of books were used to prepare the lectures and the tour material. Kelly was paid on July 31st and August 31st and was not provided any additional benefits or insurance by the university. Required: Determine the tax treatment of Kelly's income and expenses for 2023. Apply the four tests within the guidelines used by the courts to determine whether a taxpayer is an employee or an independent contractor.

18) Alistair was employed by ABC Ltd. (a Canadian-controlled private corporation) from January to December of 2023. Alistair earned a gross salary of $72,000. The following deductions were made during the year: Income tax

$20,000

CPP & EI

$4,453

Registered Pension Plan contribution

$3,000

The following amounts were paid by ABC Ltd. in 2023 on Alistair's behalf:

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CPP & EI

$4,834

Registered Pension Plan

$3,000

Group life insurance

$1,200

Additional information: On January 15, 2021, Alistair was given an option to purchase 500 shares of ABC for $5.00 per share when the market value was $5.50. Alistair exercised the option on June 1, 2022, when the shares were valued at $7.00 and sold the shares on March 17, 2023 when the market value was $8.00 per share. Alistair pays $50 a month for a personal cell phone. Alistair purchased $300 worth of merchandise (at cost) from ABC Ltd. during the year. The retail value of the merchandise was $500. Required: A) Calculate Alistair's minimum net income for tax purposes from employment for 2023, in accordance with Section 3 of the Income Tax Act. B) Calculate Alistair's capital gain from the sale of the stock option. C) Identify items that have been omitted in your calculations in A and B. (Alistair minimizes the tax liability whenever possible.) D) Will Alistair be able to deduct the stock option deduction to arrive at taxable income? Why or why not?

19) Wyatt Harris worked for RET Co. from March 1st to December 31st during the year. Wyatt earned a monthly base salary of $4,000, plus a 1% commission on sales. During the year, Wyatt's sales totaled $800,000. RET required Wyatt to pay for some employment expenses. Wyatt travelled out of the city most days to sell to customers in surrounding towns and received a monthly allowance of $500 to cover travel costs (which has been accurately recognized as ‘unreasonable'). Wyatt and RET each contributed $2,000 to Wyatt's registered pension plan during the year. Wyatt provided you with the following receipts for the year: Gasoline receipts related only to employment

$5,200

Meals with clients

3,200

Purchase of a laptop

1,000

Advertising costs

800

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Phone call charges for business

1,200

Consumable supplies for work

500

Membership to a local golf club

8,000

Wyatt purchased a new vehicle during the year to use for employment at RET. 12,000 of the 25,000 km driven during the year were for business purposes. The vehicle cost Wyatt $39,000 plus an HST of 11%. Work-related interest payments on the car loan totaled $200 per month. Required: Calculate Wyatt's minimum employment net income for tax purposes for the year in accordance with Section 3 of the Income Tax Act. (Round intermediate and final answers to nearest whole dollar.)

20)

The following case pertains to the 2022 tax year.

Angelo is employed fulltime as the Head of Human Resources at State Fund Corporation ("State Fund"), a large public corporation with its head office located in Toronto. The following information is provided regarding the taxation year: 1) Salary

$275,000

Payroll deductions (paid by Angelo): Employment Insurance premiums

$953

Canada Pension Plan contributions

3,500

Registered pension plan contributions

9,000

Income tax

50,400

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State Fund paid for the following amounts on Angelo’s behalf in 2021: a.

Canada Pension Plan contributions

$3,500

Employment Insurance premiums

1,334

Registered pension plan contributions

9,000

Gym membership

500

Group term life insurance premium

700

Extended health and dental premium

600

Group sickness and accident insurance

400

3) Angelo is provided with a company car and State Fund pays the $1,000 per month lease cost. The company also pays for the annual operating costs of $3,500. Angelo drove the car for 20,000km during the year, and the travel log shows that about 30% of the total km related to performing employment duties. 4) Angelo also participates in State Fund's employee stock option plan, and three years ago was granted the option to acquire shares for $45 per share. At the time, the shares were trading for $39 per share. Angelo exercised the option in January of this year and acquired 1,000 shares (the shares were trading for $50 per share at that time). In December of this year, Angelo sold 800 shares for $52 per share. 5) State Fund allows employees to work from home two days a week. Angelo maintains a home office and allocates 10% of the housing costs (property tax, internet, utilities, and home insurance) to this office. In 2021, 10% of the total costs were $2,400. Angelo also purchased a new computer this year for $3,000 to be used exclusively for working from home. The nature of Angelo's work (HR) does not require meeting with clients of State Fund. Required: Calculate Angelo's income from employment for this year. You must provide a brief explanation for anything you have intentionally omitted from the calculation. No marks will be given for unexplained omissions.

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21)

The following case pertains to the 2022 tax year.

Izumi Tanaka is employed by TSK Inc., a Canadian-controlled private corporation. The following information has been provided to you: 1) Izumi earned $90,000 from TSK. 2) A cash bonus of $8,000 was announced on December 3rd, to be paid to Izumi on January 10th of the following year. 3) Izumi was provided with a company car for the entire year. The cost of the car (including taxes) was $40,000. All operating costs were paid by TSK. Izumi drove the car 21,000 kilometers during the year. 10,000 kilometers were for personal use. 4) Izumi and TSK each contributed $2,000 towards Izumi's registered pension plan. 5) Izumi was presented with a watch from TSK, valued at $200, as a birthday gift. 6) In January, Izumi was granted a stock option to purchase 2000 shares in TSK at a cost of $8.00 per share. At that time, the fair market value per share was $9.00. Izumi exercised the option in February when the market value had risen to $9.50 per share. 7) TSK provided Izumi with a $20 meal allowance once a month due to the two hours of overtime that was required to be worked once a month immediately following eight hours of regular work. 8) An annual union due of $850 was deducted from Izumi's pay during the year. Required: A) Calculate Izumi's minimum employment income for tax purposes in accordance with Section 3 of the Income Tax Act. B) Identify any items that have been omitted in your calculations, and briefly explain why. (Round intermediate calculations to nearest whole dollar.)

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