Question

Mr. Brown's employer provides him with an automobile for his personal use, and pays all operating costs for that vehicle. The vehicle, used by Mr. Brown throughout the taxation year, cost his employer $36,500. Mr. Brown drove the vehicle 40,000 km during the year, of which 21,000 km were for personal purposes. His employer paid \$7,750 in operating costs for the year. Mr. Brown paid $800 to his employer for the use of the vehicle. Mr. Brown was on disability leave for 2 months during the year, and returned the car and keys to his employer. Which one of the following amounts represents the minimum taxable benefit that Mr. Brown must include in his employment income for the use of this vehicle? (do not use a dollar sign or comma when answering. round to the nearest whole number)

Answer 1

The minimum taxable benefit that Mr. Brown must include in his employment income for the use of the vehicle is $6,610.

Step-by-step explanation:

The minimum taxable benefit that Mr. Brown must include in his employment income for the use of the vehicle is calculated using the standby charge and the operating cost benefit. The standby charge is calculated as 2% of the cost of the vehicle per month, multiplied by the number of months the vehicle was available to Mr. Brown. In this case, the standby charge would be 2% * $36,500 * (12 - 2) / 12 = $730. The operating cost benefit is calculated as $0.28 per kilometer driven for personal purposes. In this case, the operating cost benefit would be $0.28 * 21,000 = $5,880. Therefore, the minimum taxable benefit would be $730 + $5,880 = $6,610.