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What is the maximum deduction you can claim under ITA 8 for employr A) $5,000. B) $9,000. C) $11,000. D) $16,000.

What is the maximum deduction you can claim under ITA 8 for employr A) $5,000. B) $9,000. C) $11,000. D) $16,000.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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(show calculations) You were hired as a commissioned salesman in July 2020. You received a salary of $60,000, and $5,000 of commissions. $6,000 of commissions you earned in December will be paid in January 2021. Because you travel to negotiate sales contracts, you pay your own vehicle and promotional expenses. Your employer has signed a Form T2200 and certified that no reimbursements were paid. You incurred the following expenses from July through December 2020: $20,000 Driving costs (90% of driving was for employment purposes): 4,000 750 2,250 3,000 Meals and entertainment for potential customers Fuel Insurance Repairs Leasing costs ($500 per month) What is the maximum deduction you can claim under ITA 8 for employment expenses? A) $5,000. B) $9,000. C) $11,000. D) $16,000.
Transcribed Image Text:(show calculations) You were hired as a commissioned salesman in July 2020. You received a salary of $60,000, and $5,000 of commissions. $6,000 of commissions you earned in December will be paid in January 2021. Because you travel to negotiate sales contracts, you pay your own vehicle and promotional expenses. Your employer has signed a Form T2200 and certified that no reimbursements were paid. You incurred the following expenses from July through December 2020: $20,000 Driving costs (90% of driving was for employment purposes): 4,000 750 2,250 3,000 Meals and entertainment for potential customers Fuel Insurance Repairs Leasing costs ($500 per month) What is the maximum deduction you can claim under ITA 8 for employment expenses? A) $5,000. B) $9,000. C) $11,000. D) $16,000.
Part 1 (ITA 3) Division B Net Income to Division C Taxable Income to Taxes Payable for Individuals ITА 3(a) + Bin #1- Net Employment - losses carry forward 20 years and carry back 3 years (carrying baskets) + Bin # 2 - Net Business & Property – losses carry forward 20 years and carry back 3 years (carrying baskets) + Bin # 4 - Other Income ITА 3 (b) + Bin # 3 – Net Capital – losses carry forward for infinity and carry back 3 years (carrying basket) IТА З (c) - Bin # 5 - Other Deductions = Sources of Income ITA 3 (d) Losses in current year from Bins 1, 2, 4 = Division B Net Income Equivalent to Capital Gains Deduction for Employee Stock Options ITA 110 Payments included to calculation Division B but not included for Division C (e.g. social assistance) - Losses from other years (carrying baskets Bin #1 & 2) ITA 111 Losses from other years (carrying basket Bin #3 limited to Net Capital Income included in ITA 3 (b) = Division C Taxable Income x Applicable Tax Rates ΙΤΑ 118 Tax Credits = Division E Taxes Payable for Individuals
Transcribed Image Text:Part 1 (ITA 3) Division B Net Income to Division C Taxable Income to Taxes Payable for Individuals ITА 3(a) + Bin #1- Net Employment - losses carry forward 20 years and carry back 3 years (carrying baskets) + Bin # 2 - Net Business & Property – losses carry forward 20 years and carry back 3 years (carrying baskets) + Bin # 4 - Other Income ITА 3 (b) + Bin # 3 – Net Capital – losses carry forward for infinity and carry back 3 years (carrying basket) IТА З (c) - Bin # 5 - Other Deductions = Sources of Income ITA 3 (d) Losses in current year from Bins 1, 2, 4 = Division B Net Income Equivalent to Capital Gains Deduction for Employee Stock Options ITA 110 Payments included to calculation Division B but not included for Division C (e.g. social assistance) - Losses from other years (carrying baskets Bin #1 & 2) ITA 111 Losses from other years (carrying basket Bin #3 limited to Net Capital Income included in ITA 3 (b) = Division C Taxable Income x Applicable Tax Rates ΙΤΑ 118 Tax Credits = Division E Taxes Payable for Individuals
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