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Determine the minimum amount of taxable capital gain

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Reference no: EM132566546

Question a) Prim has decided to move to Germany in 2019. She sells both her house and her cottage in Canada. Information related to these properties are as follows:

Property    Proceeds of Disposition         ACB            Year Purchased

House                $490000                      $310000            2005

Cottage              $800000                       $600000             2003

Determine the minimum amount of taxable capital gain that Prim must report on her 2019 tax return as a result of the above dispositions.

Question b) Cato is the sole shareholder of Cornucopia Ltd. He needs to borrow $100,000 from the company to pay off some personal gambling debts, and does so on August 1, 2019. Cornucopia Ltd. has a fiscal year end of September 30th, and has never offered loans to employees in the past. The loan does not bear interest.

i. How is it determined whether a loan is an employee loan or a shareholder loan? Which type of loan is this (likely) and why?

ii. Describe the tax consequences for Cato if he repays the loan by September 30, 2020?

What if he doesn't? (no calculations required)

Reference no: EM132566546

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