Hey!!! As per your demand here I am providing you sample Examination Questions of Taxation Law of Federation of Law Societies of Canada

Your client, Anita Mavin a successful entrepreneur is the controlling shareholder and the manager of Mavin Inc., a company engaged in website design (60% of total gross receipts) and desk top publishing (40% of gross receipts).

Employee retention of the web-site designers is becoming a problem in this very competitive market and Antia Mavin wants to create an attractive benefit package for the web-designers.

However, it would be uneconomical to provide the desk top publishing division which has 15 full time staff with the same benefits as the website designers. Also, there has been talk that the desk-top publishing employees are considering unionizing.

Anita Mavin’s son-in-law Ralph suggested the following re-organization.
Ralph advised Anita Mavin that considerable savings could be achieved by contracting out the desk top publishing work to independent contractors. Not only would this remove the potential union problem but there would be a savings of payroll costs from decreased benefit payments and various employment related taxes and withholdings. Mavin Inc. would then be able to offer the website designers a new employee benefits package without creating a perception of inequality between the two divisions.

Ralph recommends giving all desk-top publishers a “One Week Working Notice of Termination” and a $1,500 “settlement payment” to compensate for the “anguish and humiliation of an abrupt and unfeeling termination”. Ralph says the employees would not pay tax on the settlement payment.

As part of the termination package, Mavin Inc. could offer free job counseling and educational seminars, including seminars on how to start a small business. These types of services are valued at $600 if purchased in the private market.

Former desk-top employees who decide to enter into Independent Contractor Agreements with Mavin Inc. would be offered an opportunity to buy used computers for $1,500. As independent contractors, the former desk-top employees could set their own hours and could work for other people, however Mavin Inc. would guarantee them 120 hours a month of work for the first year.

They would have access to secretarial staff, the office copying machine and an independent contractor’s lounge to work in, should the need arise.

The former desk-top publishing employees would benefit as they could easily deduct the expenses related to their home offices, transportation costs going from their home office to Mavin Inc.’s office to pick up their work assignments and for meetings, as well as the cost of their computers and paper supplies.

What are the tax consequences of this proposal for both Mavin Inc. and the desk-top publishing employees?

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Sample Examination Questions of Taxation Law of Federation of Law Societies of Canada

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