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Mr$.$ Carter Chen is a highly experienced chef with a rapidly growing clientele. While his previous employer

had taught him a great deal, he was unable to provide him with the flexibility and salary he deserved for

his level of technical skill and popularity. Thus, he decided to take a position with Momentum Inc. $($MI$),$ a

recently opened, high$-$end restaurant located on the Halifax waterfront. On May $1,2024,$ he relocated the

$250$ kilometers from Pictou and immediately began working for MI$.$ They paid for all Mr$.$ Chen$$s moving

expenses. This moving benefit is non$-$taxable.

The compensation package offered to Mr$.$ Chen included a salary of $$132,000$ per year, a one$-$time bonus

of $$10,000($half to be paid on May $1,2024,$ and the other half to be paid on May $1,2025),$ and employee

stock options to purchase $3,000$ shares of the company for $$15$ per share, as well as other benefits. The

stock options and benefits package are available to all employees. The fair market value of the shares on

the date of the offer was $$15$ per share.

Given the cost of rent in Halifax, Mr$.$ Chen decided to purchase a home instead of renting an apartment.

Since he had not yet sold his old home in Pictou, the company decided to provide him with a five$-$year,

interest free loan to cover the down payment of $$100,000$ on his new home. The prescribed rate of

interest at the time the loan was provided $($April $1,2024)$ was $4\mathrm{.}0\%$ and increased to $4\mathrm{.}5\%$ on July $1,2024.$

All of this was completed just prior to his move and the house was ready for his arrival on March $1,2024.$

Mr$.$ Chen is responsible for purchasing his own supplies for employment purposes. The company will

provide him with Form T$2200$ each year stating that he is required to pay for certain employment

expenses without reimbursement. Other Information:

$1.$ MI contributed $$5,000$ to the company RPP on behalf of Mr$.$ Chen.

$2.$ During the period May $1,2024,$ to December $31,2024,$ Mr$.$ Chen earned a salary of $$88,000.$ Of

these earnings, $$84,530$ was paid by the end of $2024$ with the balance paid on January $2,2025.$

The company withheld the following amounts from his salary:

Income taxes $ $29,725$

CPP $4,056$

EI $1,049$

RPP contributions $4,200$

$3.$ MI provides group medical coverage to all its employees. The private health plan premiums paid

by MI on behalf of Mr$.$ Chen cost $$2,450.$

$4.$ MI strongly believes that employees who partake in healthy living get sick less often and achieve

higher performance in the workplace. Thus, they have provided Mr$.$ Chen with a fitness

membership at the local YMCA that cost the company $$970$ in $2024.$ They also paid $$575$ for him

to take a sculpting classin October $2024.$ MIsupports hobby interests to help maintain the mental

health of its employees.

$5.$ Mr$.$ Chen exercised his employee stock options on November $1,2024,$ when the shares were

trading at $$17$ each. He has not yet sold his shares and intends to hold them for at least two years.

$6.$ Mr$.$ Chen spent $$4,500$ in $2024$ to purchase custom knives that he uses solely for his chef duties

at MI$.$ These knives were required to perform his work and if he chooses to leave MI$,$ he will take

the knives with him.

$7.$ Mr$.$ Chen paid $$800$ in mandatory professional dues in $2024.$ The company does not reimburse

its employees for their professional dues. $8.$ Mr$.$ Chen maintains a small home office for collecting, writing and storing his recipes. He does

this on his personal laptop. The workspace occupies $200$ square feet of him $2,000$ square foot

home. The costs associated with his home and various home office expenses include:

Mortgage interest $$8,200$

Computer purchase $1,800$

Office supplies $225$

Home telephone $1,100$

Electricity expense $1,385$

Property insurance $($eight months$)1,675$

Heat expense $3,2159.$ Mr$.$ Chen was provided with an automobile that cost $$42,000($HST included$).$ The vehicle was

available to him for the entire eight months he was employed with MI in $2024.$ During this

period, he drove a total of $20,000$ kilometers, $16,000$ km were related to personal use of the

vehicle. MI pays all operating and maintenance costs related to this vehicle.

Required:

$($A$)$ When is Mr$.$ Chen$$s $2024$ T$1$ Individual Income Tax Return due to be filed?

$($B$)$ Determine Mr$.$ Chen$$s net employment income for $2024.$ Show all supporting calculations and

explain the treatment of each item to receive full grades. Show your details in notes to the

summary. Round all calculations to the nearest whole dollar.

$($C$)$ Provide Mr$.$ Chen with tax planning advice specific to his situation. Given what you know about

Mr$.$ Chen and his activities, would you advise him to structure anything differently? Why or why

not?

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