Benefit

MAcc 5P41

Benefit Questions

1. Rosemary (Rose) Bush is the president and sole shareholder of RoseBush Limited (RBL) a Canadian-controlled private corporation with a December 31st taxation year-end. RBL’s primary business is landscaping. In the winter RBL’s source of income is from snowplowing. On February 6, 2015 RBL purchased a Ford F150 for $35,600 including HST. The F150 is a single cab pick-up truck with a bench seat that will hold 3 people including the driver. Rose will have exclusive use of the F150. The F150 will be used primarily to haul materials for landscaping jobs and for snowplowing in the winter. Rose will also take the F150 to her cottage in the summer. Rose estimates that she will drive a total of 30,000 kms in 2015. She believes that the F150 will be used 70% for business and 30% for personal use. RBL will pay all of the operating costs for F150 which are estimated to be $6,000 for 2015.

Required: Advise Rose on the tax consequences to her personally for using the F150 in 2015. Use calculations where necessary to explain the tax consequences to Rose

2. Hy Alweicz is planning to commence operating a medical marijuana grow-op in Grimsby, Ontario. He will operate this business through Hy Limited (HL) which he incorporated in 2014. HL is a CCPC with a December 31st taxation year-end. Hy is the sole shareholder and president of HL. Hy needs a vehicle to carry out his employment duties. He is considering a new 2015 Mercedes Benz (MB), GLK 350 4MATIC SUV that has a list price of $62,098 excluding 13% HST. The MB will be purchased on March 1st and will be financed through the dealership. Interest paid in 2015 will be $5,000 ($500 per month). Hy estimates that he will drive the MB 25,000 kms a year and that 55% of these kms will be for business purposes. Hy is unsure if he should own the MB personally or have HL own it. Hy estimates that HL will have active business income of $350,000 in 2015 after paying him a salary of...