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Homework answers / question archive / Langara College - FMGT 2325 TAXATION MID 1 REVIEW
Langara College - FMGT 2325
TAXATION MID 1 REVIEW.docx
Q1)Whether or not an individual is an employee of a company or an independent contractor is? ________.
Choose the correct answer.
A.determined by whether the individual is organized as a business
B.easily determined by the legislation and clear rules in the Income Tax Act
C.determined by the facts and circumstances that pertain to the case and court precedent? (i.e. court? tests)
D.determined by whether the company pays the individual as an employee or as an independent contractor
Q2: The Income Tax Act ITA 6 describes taxable benefits that are included in the calculation of employment income and? 6(1)(a) describes various fringe benefits that are taxable but also indicates which fringe benefits are not taxable. Which of the following fringe? benefits, provided by an? employer, is a taxable benefit pursuant to ITA?6(1)(a)?
Choose the correct answer.
A. Premiums paid to a private health care plan
B. Contributions? (made by the? employer) to a Registered Pension Plan
C. Premiums paid to a group sickness plan
D. Premiums paid to a public health care plan
Q3: The Income Tax Act ITA 6 describes taxable benefits that are included in the calculation of employment income and? 6(1)(a) describes various fringe benefits that are taxable but also indicates which fringe benefits are not taxable. Which of the following fringe? benefits, provided by an? employer, is NOT a taxable benefit pursuant to ITA? 6(1)(a)?
Choose the correct answer.
A.Premiums paid to a public health care plan
B.Travel expenses for an? employee's spouse, who accompanies the employee on a business trip
C.Value of board and lodging in the city where the? employer's office is located
D.Premiums paid to a group sickness plan
Q4: The final decision of whether an individual will be treated as an employee or independent contractor of a company is made by? ________.
Please choose the correct answer.
A.the courts
B.the hiring company
C.the CRA
D.the hired individual
Q5: Which of the following fringe benefits provided by an employer will not result in a taxable benefit to an? employee?
Please choose the correct answer.
A.Auto allowance paid at the prescribed amount per? kilometre, for the total business? (employment) kilometres driven in a calendar year
B.An award provided to an employee after 3 years of exemplary service
C.Interest free loan to the employee
D.Company car that is made available for the? employee's personal use
Q6: Which of the following is excluded from the calculation of an? employee's net employment? income?
Choose the correct answer.
A.an? employer's contribution to public health care premiums
B.an? employer's contribution to a Registered Pension Plan
C.standby charge for the? employee's use of the company car
D.a monthly allowance of? $200 provided to an employee for incidental costs
Q7: Which of the following educational fringe benefits would be taxable income to the? employee?
Choose the correct answer.
A.An employer pays the cost of a corporate tax update class for its tax director.
B.An employer pays the costs of a leadership skills class for its director of training.
C.An employer pays the costs of a business communications class for any of its employees who want to take it.
D.An employer pays the costs of a cooking class for any of its employees who want to take it.
Q8: Which of the following fringe benefits is a? non-taxable benefit to? employees?
Choose the correct answer.
A.A $500 award is given for 11 year of service.
B. A? company's top salesman gets a $600 bonus during the year.
C.Premiums paid to a group health and sickness plan
D.A grocery store employee gets a 25?% discount on? groceries, and this discount is available to all store employees.
Q9: SolitaSolita works in the corporate office at? Loblaw's and receives the following during the? year:
How much of the items are? taxable?
Choose the correct answer.
A.$56,250
B.$52,300
C.$52,800
D.$53,300
Q10: JanisJanis works as a tire changer at Canadian Tire and receives the following during the? year:
Given the following? information, what is Janis?'s taxable income from Canadian? Tire?
Choose the correct answer.
A.$38,150
B.$37,150
C.$37,000
D.$37,100
Q11: If an employer provides private health care benefits to an? employee, the cost is? ________ to the employer and? ________ to the employee.
Choose the correct answer.
A.non-deductible, taxable
B.deductible, taxable
C.non-deductible, non-taxable
D.deductible, non-taxable
Q12: ABC Company is considering paying golf membership dues for its sales employees. The employees use the golf membership more than? 50% for business purposes. The club dues? ________.
Choose the correct answer.
A.are not a taxable benefit to the employee
B.are a taxable benefit to the employee
C.are? 50% of a taxable benefit to the employee
D.cannot be paid by a company on behalf of its employees
Q13: When an employee is provided with a company auto that is made available for the? employee's personal use? ________.
Please choose the correct answer.
A.there is no taxable benefit to the employee
B.the taxable benefit to the employee has to be calculated each? year, based on the number of days that the auto is made available for the? employee's personal use
C.the cost of the auto is? non-deductible to the employer
D.the taxable benefit to the employee is equal to the deductible cost to the employer
Q14: Which of the following best describes how employee benefits can be used for tax? planning?
Choose the correct answer.
A.Benefit programs are generally created solely for tax avoidance or deferral purposes.
B.Employers can use arrangements in which employees receive very little salary and a large amount of benefits to successfully avoid tax.
C.Employers can provide fringe benefits to employees that are? non-taxable benefits pursuant to the Income Tax Act.
D.Benefit programs generally increase the taxes payable of an employer and decrease the taxes payable of employees.
Q15: For a Canadian individual taxpayer who has one job and no other sources of? income, the? individual's taxable income would be? ________.
Choose the correct answer.
A.zero
B.equal to the? individual's wages
C.equal to the? individual's wages plus capital gains
D.equal to the? individual's wages less deductions permitted
Q16: Sam is a U.S. resident who lives in the United States and works in Canada. He earns wages from his Canadian employer and earns interest on his U.S. bank account. He has no other sources of income in the current year. His taxable income in Canadian the current year includes? ________.
Choose the correct answer.
A.neither his wages nor interest on the bank account
B.his wages only
C.his wages and interest on the bank account
D.interest on the bank account only
Q17: Which of the following BEST describes the tax planning opportunity related to bonus arrangements for an? employee?
A.The fact that employment income is reported on the cash basis and business income is calculated on the accrual basis allows for a deferral of? taxes, but this deferral is limited by the rules under ITA?78(4) which states that a declared bonus is only deductible for the employer if the bonus is paid within 180 days of the?employer's year end.
B.The fact that employment income is reported on the cash basis and business income is calculated on the accrual basis allows for a deferral of? taxes, but this deferral is limited by the rules under ITA? 78(4) which states that a declared bonus is only deductible for the employer if the bonus is paid within 260 days of the?employer's year end.
C.The fact that employment income is reported on the cash basis and business income is calculated on the accrual basis allows for an unlimited deferral of taxes as a bonus will be deductible for the employer at the time it is? declared, but it will not be subject to taxes for the employee until the bonus is received.
D.The fact that employment income is reported on the accrual basis and business income is calculated on the cash basis allows for a deferral of? taxes, but this deferral is limited by the rules under ITA? 78(4).
Q18: Which of the following is NOT one of the criteria used to determine if there is intent for a contract of service? (employer-employee relationship) or a contract for services?(business relationship) according to? CRA's Guide RC4110? "Employee Or? Self-Employed?"
A.Ability of individual to hire assistants or subcontract services
B.Ownership of tools and equipment required for the job
C.Opportunity for profit and financial risk of loss
D. Individual's job title and description
Q19: In the current? year, Mr. Nguyen is provided with a vehicle owned by his? employer, Translux Inc. The vehicle was originally purchased by Translux Inc. five years ago for?$29,500 (including? HST). Nguyen provides you with the following? information:
Days the vehicle was available for use by Mr.? Nguyen: 275
Months the vehicle was owned by Translux? Inc.: 12
Fair market value of the vehicle in the current? year: $12,500
Total kilometres driven in the current? year: 32,000
Personal kilometres driven in the current? year: 12,000
The minimum standby charge arising from the employer owned vehicle for Mr. Nguyen in the current year? is:
A.$2,250
B.$5,310
C.$4,247
D.$7,080
Q20: In the current? year, Ms. Patel is provided with a vehicle leased by her? employer, Everex Ltd. The vehicle originally cost? $30,000 and was leased by Everex Ltd. in the prior? year, on a? 36-month lease term. Ms. Patel provides you with the following? information:
Days the vehicle was available for use by Ms. Patel in the current? year: 250
Days the vehicle was leased by Everex Ltd. in the current? year: 365
Fair market value of the vehicle in the current? year: $14,500
Lease payments? (including HST, excluding? insurance): $820 per month
Total kilometres driven in the current? year: 29,000
Personal kilometres driven in the current? year: 15,000
The minimum standby charge arising from the employer leased vehicle for Ms. Patel in the current year? is:
A.$6,560
B.$2,320
C.$3,279
D.$4,373
Q21: Susan is an auditor at a small public practice accounting? firm, Smith? & Warren? LLP, and receives the following during the? year:
?Salary: $80,000 T
Holiday gift? basket: $350 value NT
Annual membership at local? gym: $1,750 value? (Susan uses this membership for personal use? only) T
Life insurance premiums paid by? employer: $1,100 T
Private health care insurance premiums paid by? employer: $975 NT
In? addition, Susan incurred the following expenses during the? year, for which she was not? reimbursed:
CPA Professional Dues? (professional status is required by statute for? auditors): $1,500 D
Travel expenses? (incurred to perform audits of? out-of-town clients of the? firm): $950 D
Which of the following is the correct amount of net employment income for? Susan?
A.$79,650
B.$80,750
C.$82,850
D.$80,400
Q22: With regard to the taxation of allowances and reimbursements provided by an? employer, which of the following is? correct?
A.Auto allowances are always included in employment taxable benefits.
B.Allowances that are not reasonable are included in employment taxable benefits.
C.All reimbursements are included in employment taxable benefits.
D.All allowances are included in employment taxable benefits.
Q23: Which of the following is not an allowed employment deduction as per ITA? 8?
A.Capital cost allowance for a laptop computer used by the employee for employment purposes
B.Annual professional membership dues where professional status is required by statute
C.Legal expenses of employee incurred to collect salary or wages
D.Employee contributions to a Registered Pension Plan
Q24: With respect to the ITA? 110(1)(d) or? (d.1) stock option? deduction, ________.
A.the deduction is equal to the full amount of the related stock option taxable benefit which was included in the computation of net employment income
B.the deduction is available for all employees of public corporations that provide compensation in the form of stock options
C.the deduction is equal to? one-half of the related stock option taxable benefit which was included in the computation of net employment income
D.the deduction is available for all employees of Canadian controlled private corporations that provide compensation in the form of stock options
Q25: With respect to the taxation of benefits provided to a shareholder by a? corporation, such as providing an auto for the? shareholder's personal? use, ________.
Choose the correct answer.
A.the value of the benefit is excluded from the? shareholder's income and deductible by the corporation
B.the value of the benefit is excluded from the? shareholder's income and not deductible for the corporation
C.the value of the benefit can be included in the? shareholder's income and deductible by the corporation
D.the value of the benefit is included in the? shareholder's income and not deductible for the corporation
Q26: ?________ involves structuring transactions to reduce the tax liability of the taxpayer consistent with the intent of the income tax legislation.
Choose the correct answer.
A.Tax evasion
B.Tax planning
C.Tax fraud
D.Tax avoidance
Q27: Carl works for Sam. Sam pays Carl entirely in cash and does not issue any tax reporting documents to? Carl, although both know they are supposed to submit reporting documentation. Carl does not file an income tax return. Carl and Sam are engaging in? ________.
Choose the correct answer.
A.tax avoidance
B.tax planning
C.tax collection
D.tax evasion
Q28: A transaction? (or series of? transactions) that results in a tax benefit and has no other bona fide purpose is? ________.
Choose the correct answer.
A.effective tax planning
B.a tax shelter
C.a general? anti-avoidance rule? (GAAR)
D.an avoidance transaction
Q29: The largest single source of revenue for the Canadian government is? ________.
Choose the correct answer.
A.personal income tax
B.personal property tax
C.goods and services tax
D.corporate income tax
Q30: Which of the following taxes combines both federal and provincial sales taxes into a tax? levy?
Choose the correct answer.
A.Goods and Services Tax? (GST)
B.Provincial Sales Tax? (PST)
C.Combined Sales Tax? (CST)
D.Harmonized Sales Tax? (HST)
Q31: Which of the following? elements, within the organization and structure of the Income Tax? Act, refers to a subparagraph of the Income Tax? Act?
Choose the correct answer.
A.lowercase Roman numeral in parentheses
B.lowercase letter in parentheses
C.uppercase Roman numeral
D.Arabic numeral
Q32: Canadian individual income tax is an example of? a(n) ________ tax system.
Choose the correct answer.
A.regressive
B.progressive
C.aggressive
D.flat
Q33: The primary purpose for the federal government to collect tax revenues is to? ________.
Choose the correct answer.
A.redistribute wealth from the wealthy to the poor
B.provide funding for provincial and territorial government units
C.provide public goods and services
D.encourage economic expansion
Q34: Which of the following taxes is inherently a regressive tax? system?
Choose the correct answer.
A.provincial individual income tax
B.sales tax
C.federal individual income tax
D.property tax
Q35: Consider the following scenario.
MichelleMichelle has taxable income of $ 450,000 and income taxes payable of $67,500. Wendy has taxable income of $ 95,000 and taxes payable of $14,250. This scenariorepresents which type of tax system?Choose the correct answer.
A.flat
B.regressive
C.GST
D.progressive
Q36: Income Tax Regulations? ________.
Choose the correct answer.
A.are additions to the Income Tax Act that have not yet been passed into law
B.are established to provide specific details and procedural requirements necessary to enforce the Income Tax Act
C.are proposed changes to the Income Tax Act that are scheduled to be voted on
D.are established to adjust or change income tax rates on an annual basis
Q37: Division? ________ of the Income Tax Act deals with computing the net income for a taxpayer resident in Canada.
Choose the correct answer.
A.B
B.C
C.A
D.D
Q38: Administrative or informative guides that can assist with filing an individual income tax return can be found? ________.
Choose the correct answer.
A.within the Income Tax Regulations
B.on Canada Revenue? Agency's website
C.within the narrative of court cases
D.within the Income Tax Act
Q39: CRA publications can best be described as? ________.
Choose the correct answer.
A.helpful interpretations of how the Income Tax Act applies to? real-life scenarios;? however, these interpretations do not have the force of law
B.extensions of the Income Tax Act that have the force of law
C.established precedents for how a court will decide a tax case
D.internal government documents that are not intended for the public
Q40: If a Canadian taxpayer is unsure of the income tax consequences of a proposed? transaction, he or she may choose to pay a fee for the CRA to issue? a(n) ________.
Choose the correct answer.
A.Interpretation Bulletin
B.Information Circular
C.Income Tax Folio
D.Advance Income Tax Ruling
Q41: Section 3 of the Income Tax Act? describes:
Choose the correct answer.
A.the computation of Taxable Income for a taxpayer for the current year
B.the liability for income tax for residents of Canada
C.the liability for income tax for? non-residents earning Canadian income
D.the computation of Net Income for a taxpayer for the current year
Q42: A Taxable Capital Gain is defined? as:
Choose the correct answer.
A.50% of a Capital Gain realized in a taxation year
B.Taxable Capital Gains minus? 50% of Capital Losses in a taxation year
C.Taxable Capital Gains minus Allowable Capital Losses in a taxation year
D.Capital Gains minus Capital Losses realized in a taxation year
Q43: When the Income Tax Act refers to a? person, it refers to? ________.
Choose the correct answer.
A.a? corporation, partnership, or trust
B.an individual person
C.an individual? person, corporation, or a trust
D.an individual? person, partnership, or corporation
Q43: If a Canadian citizen is subject to taxes as a resident of Canada and as a resident in another? country, most often? _______________.
Choose the correct answer.
A.he or she will be subject to double taxation on his or her worldwide income
B.the Canadian Income Tax Act will determine the? individual's residency
C.the taxpayer? can't choose which country he or she wants to claim residency for tax purposes
D.international tax treaties will determine the? individual's residency
Q45: Whether an individual is a resident or? non-resident for Canadian tax purposes? ________.
Choose the correct answer.
A.is not easily determined for all individuals
B.is determined by the? individual's citizenship
C.is determined solely on the basis of where an individual lives
D.is clearly defined in ITA 250 in the Income Tax Act
Q46: Sam is an individual who is a Canadian citizen. On July 1 of the current? year, Sam moves to Mexico. He sells his Canadian? home, drives his car to? Mexico, rents an apartment in Mexico? City, and commences employment in Mexico. Sam is single and does not have any dependents or a?spouse, and at the time he leaves? Canada, he does not have any intent to return to Canada to live. What type of Canadian taxpayer will Sam be for the current? year?
Choose the correct answer.
A.resident abroad
B.part-year/part-time resident
C.resident
D.non-resident
Q47: Regarding the taxation of? non-residents in? Canada, ________.
Choose the correct answer.
A.non-residents who are employed in Canada are taxed on the same income as residents of Canada
B.non-residents are never subject to Canadian tax
C.non-residents are only subject to tax in Canada on employment income earned in Canada
D.non-residents are subject to tax on certain sources of income earned in Canada
Q48: David is a French citizen who comes to Canada to attend a Canadian university. He also works part time during his stay in Canada. He arrives in Canada on May 1 of the current year and departs to return to France on February 1 of the following year. David never intended to stay in Canada permanently and is treated as a resident of France in the both the current and following years. What is? David's residency? status, for tax?purposes, in Canada in the current? year?
Choose the correct answer.
A.as a? part-year resident
B.as a? non-resident
C.as a resident alien
D.as a resident
Q49: Mark is a U.S. resident who lives in Minnesota and who owns a second home in Winnipeg. His only income consists of wages from his U.S. employer. The second home is used only by Mark and his? family, and he does not rent it out for any portion of the year. Given these?circumstances, Mark is subject to Canadian taxes? ________.
Choose the correct answer.
A.on any income he earns while staying at the second home
B.each year he owns the second home
C. only if he becomes a permanent Canadian resident
D.in the year he sells the second home for a profit
Q50: Individual taxpayers are considered Canadian residents if? ________.
Choose the correct answer.
A.they maintain primary residential ties in? Canada, whether they live in Canada or abroad
B.they invest in the Canadian stock market or conduct business in Canadian dollars
C.they have ever filed a Canadian resident tax return
D.they are Canadian citizens
Q51: Determining residency applies to? ________.
Choose the correct answer.
A.individuals only
B.individuals, corporations, and trusts
C.individuals and trusts
D.individuals and corporations
Q52: As ITA? 3(b) indicates Taxable Capital Gains exceed Allowable Capital? Losses, which of the following statements is correct in the calculation of Net Income for tax purposes in a? year?
Choose the correct answer.
A.The net amount reported under? 3(b) does not apply in the computation of net income for a year
B.The net amount reported under? 3(b) cannot be zero
C.The net amount reported under? 3(b) cannot be a positive amount
D.The net amount reported under? 3(b) cannot be a negative amount
Q53: How is the collection of corporate income taxes? handled?
Choose the correct answer.
A.Canada Revenue Agency collects federal and MOST provincial income taxes.
B.Canada Revenue Agency collects both federal and ALL provincial income taxes.
C.The applicable provincial finance and revenue agency collects both federal and provincial income taxes for corporations operating within the province.
D.Canada Revenue Agency collects federal taxes and each province collects provincial income taxes.
Q54: If a taxpayer is unsure how to treat a particular transaction on his or her income tax? return, the taxpayer could look to? ________ to determine if a precedent has been established for the same or similar transactions.
Choose the correct answer.
A.advance income tax rulings
B.draft legislation
C.court decisions
D.international tax treaties
Q55: Publications that are currently issued by the CRA to provide detailed information about specific topics within the Income Tax Act are called?________.
Choose the correct answer.
A.Technical Interpretations
B.Income Tax Folios
C.Electronic Libraries
D.Income Tax Technical News
Q56: The forms that are required to file an income tax return can be found? ________.
Choose the correct answer.
A.within Income Tax Regulations
B.on the? CRA's website
C.at municipal courthouses
D.within the Income Tax Act
Q57: A primary purpose of international tax treaties is to? ________.
Choose the correct answer.
A.establish diplomatic relations between Canada and other countries
B.allow companies to operate? tax-free outside of their home country
C.encourage companies to establish international operations
D.eliminate double taxation on the same income of a company
Q58: The entities that are subject to income tax in Canada consist of? ________.
Choose the correct answer.
A.individuals, corporations, and partnerships
B.individuals, corporations, and estates
C.individuals, corporations, and trusts
D.corporations, trusts, and estates
Q59: Corporate income taxes are imposed by? ________.
Choose the correct answer.
A.ONLY the federal government
B.the federal government and SOME provincial governments
C.ONLY provincial governments
D.the federal government and ALL provincial governments
Q60: Corporate income taxes in Canada are generally intended to be a? ________ system.
Choose the correct answer.
A.flat tax
B.regressive
C.single payer
D.progressive
Q61: Which of the following underlying objectives of the income tax system in Canada ensures that taxpayers in similar scenarios are subject to similar amounts of income tax while taxpayers in different scenarios pay different amounts of income? tax?
Choose the correct answer.
A.Neutrality
B.International Competitiveness
C.Simplicity
D.Equity
Q62: The main objective behind taxing the income of corporations in Canada is? ________.
Choose the correct answer.
A.to? re-allocate funds from large corporations to Canadian citizens
B.to discourage corporations from becoming excessively profitable
C.to deter the corporations from accumulating large profits without distributing them
D.to provide funding for the Canadian government
Q63: ?________ is/are intended to provide operational details for administration of the Income Tax Act.
Choose the correct answer.
A.Draft legislation
B.International tax treaties
C.Court decisions
D.Income tax regulations
Q64: Of the? following, which is the lowest level in the organizational format of the Income Tax? Act?
Choose the correct answer.
A.Subsection
B.Subparagraph
C.Subclause
D.Division
Q65: Which of the following persons would be subject to tax in? Canada?
Choose the correct answer.
A.a former Canadian citizen who has surrendered his citizenship and lived in the US for 5 years
B.a US corporation that employs Canadian citizens to work in its US facility
C.a US citizen who visits Canada on vacation
D.a US corporation that has a distribution facility located in Canada
Q66: The charging provision of the ITA deals with? ________.
Choose the correct answer.
A.what amount of a? taxpayer's income is subject to tax
B.the amount of tax a taxpayer owes
C.who is liable for payment of Canadian taxes
D.when a? taxpayer's taxes payable are due
Q67: Which of the following factors is MOST important when determining the residency of a corporation for Canadian tax? purposes?
Choose the correct answer.
A.Whether or not a tax treaty exists with the other countries that the corporation has operations in.
B.The location in which the highest level of decision making for the corporation takes place.
C.The? corporation's country of incorporation.
D.The residence of the CEO and board of directors of the corporation.
Q68: How is the residence of a company that is incorporated in Canada after April? 27, 1965? determined?
Choose the correct answer.
A.The company is deemed to be a resident of Canada so long as any of its shareholders are Canadian residents.
B.The company is deemed to be a resident of? Canada, and a? non-resident of any other countries within which it operates.
C.The company is deemed to be a resident of whatever country its headquarters and upper management is located within.
D.The company is deemed to be a resident of? Canada, and can also be a resident or? non-resident of other countries within which it operates.
Q69: The tax year for a corporation is? ________.
Choose the correct answer.
A.a fiscal period not longer than 53 weeks chosen by the corporation
B.a fiscal period of any length chosen by the corporation
C.the calendar year
D.any 12 month period of the? corporation's choosing
Q70: Which of the following BEST describes the general nature of a? corporation's residence?
Choose the correct answer.
A.Residence is a subjective test based on the particulars of a? corporation's operations, and is not easily manipulated.
B.Residence is primarily determined based on tax treaties that exist among countries within which a corporation does business.
C.Whether or not a company is a Canadian resident is easily determined by applying the rules within the ITA.
D.Residence is primarily determined based on the country of incorporation and which country the corporation desires to be a resident of.
Q80: Under section 3 of the? ITA, the first step in determining a? corporation's net income is? ________.
Choose the correct answer.
A.adding all positive sources of income
B.netting allowable capital losses against other sources of income
C.netting all positive and negative sources of income
D.determining the excess of taxable capital gains over allowable capital losses
Q90: When computing Net Income for Tax? Purposes, which of the following loss types are deductible against any type of income of a? corporation?
Choose the correct answer.
A.property loss carry overs
B.current year allowable business investment losses
C.current year business losses
D.employment loss carry overs
Q91: BMO Financial Group is a Canadian resident corporation that also operates in the US. With respect to taxation of the income of BMO Financial?group, it will? ________.
Choose the correct answer.
A.will NOT be subject to Canadian taxation on any of its income
B.be subject to Canadian taxation on its worldwide income
C.be subject to Canadian taxation on its Canadian and US? income, but NOT on income from other global operations
D.be subject to Canadian taxation only on its income from sources within Canada
Q92: The US? company, Walmart, is a resident of the US and also has stores in Canada. How is the corporate income of Walmart taxed in? Canada?
Choose the correct answer.
A.The income Walmart derives from its US and Canadian operations is subject to Canadian taxation.
B.The worldwide income of Walmart is subject to Canadian taxation.
C.None of? Walmart's income is subject to Canadian taxation.
D.The income Walmart derives from its Canadian operations is subject to Canadian taxation.
Q93: Corporations that are? non-residents of Canada are required to file a Canadian income tax return if they? ________.
Choose the correct answer.
A.have any Canadian resident shareholders
B.have Tax Payable under Part I of the Income Tax Act
C.generate any revenues from operations within Canada
D.have any income from sources within Canada
Q90: In which of the following situations would an individual file a tax? return, even though it is not? required?
Choose the correct answer.
A.The individual is a? non-resident of Canada with a taxable capital gain during the year.
B.The individual is due a refund of income taxes of? $1,200 for the year.
C.The individual owes income tax of? $1,200 for the year.
D.The individual disposed of a capital property at a loss during the year.
Q91: The standard filing due date for the income tax return of a single individual who is not? self-employed for the current taxation year is? ________.
Choose the correct answer.
A.April 30 of the subsequent taxation year
B.June 15 of the subsequent taxation year
C.December 31 of the current taxation year
D.December 31 of the subsequent taxation year
Q92: In order to avoid penalties and? interest, individuals must pay any taxes they owe for the current taxation year by? ________. (Assume all dates below fall on a? non-holiday week? day.)
Choose the correct answer.
A.April 30 of the subsequent taxation? year, if the individual is involved in an unincorporated? business; otherwise June 15 of the subsequent taxation year
B.June 15 of the subsequent taxation year
C.June 15 of the subsequent taxation? year, if the individual is involved in an unincorporated? business; otherwise April 30 of the subsequent taxation year
D.April 30 of the subsequent taxation year
Q93: Canadian residents who only have income from employment primarily pay their taxes? ________.
Choose the correct answer.
A.through income tax withholdings remitted to CRA by their employer
B.when they file their tax return
C.through tax credit reductions on their tax returns
D.through income tax instalments
Q94: For individuals who are required to pay income tax? instalments, the first instalment due date is? ________.
Choose the correct answer.
A.March 15
B.June 15
C.April 30
D.March 30
Q95: ?A’s income tax information contains the? following:
Estimated net tax owing for the current year is $12,000.Net tax owing for the previous year was $10,000.Net tax owing for the second previous year was $11,000. For the current taxation? year, what is the lowest first income tax instalment payment
PamelaPamela can make without being assessed interest for late?instalments?
Choose the correct answer.
A.$2,625
B.$3,000
C.$2,750
D.$2,500
Q96: Assume Erick only has income from? self-employment for the current? year, and he lives in Nunavut. In which of the following situations would he be required to make income tax instalment payments for the current? year?
Choose the correct answer.
A.Erick?'s net tax owing is $1,100 for the current year. His net tax owing was $5,000 and $5,900 in the two preceding years.
B.Erick?'s net tax owing is $5,000 for the current year. His net tax owing was $1,600 and $5,300 in the two preceding years.
C.Erick?'s net tax owing is $6,000 for the current year. His net tax owing was $1,600 and $1,500 in the two preceding years.
D.Erick?'s net tax owing is $1,600 for the current year. His net tax owing was $1,900 and $1,300 in the two preceding years.
Q97: Suppose Erick receives a CRA instalment reminder for the first quarter of the current year in the amount of $2,700. Erick does not make any instalment payments during the current year. Erick will not owe interest for a late instalment? ________.
Choose the correct answer.
A.if Erick has little to no income in the current year and his estimated taxes owing is? $0
B.if his taxes owing for the current year are $6,400 and his taxes owing for the previous year were $5,400
C.regardless of any other facts
D.if his taxes owing for the current year are $7,400 and his taxes owing for the previous year were $ 8 comma 400
Q98: The amounts shown on CRA instalment reminders are best described as? ________.
Choose the correct answer.
A.the minimum instalment that an individual can pay to avoid interest
B.the amount an individual must pay to be compliant with instalment requirements
C.the maximum instalment that an individual can pay to avoid interest
D.a payment amount an individual can make to be certain to avoid interest
Q99: ?________ involves knowingly and willingly ignoring the tax law.
Choose the correct answer.
A.Tax avoidance
B.Tax evasion
C.Tax planning
D.Tax abuse
Q100: Which of the following is true with regard to the punishment for tax? evasion?
Choose the correct answer.
A.The minimum punishment for tax evasion is five years in prison.
B.There is no punishment for tax? evasion, since tax evasion is okay as long as it is within the definition and spirit of the law.
C.The punishments associated with tax evasion vary in form and? severity, but can? include: repayment of taxes? owed, large penalties and jail time.
D.The maximum punishment for tax evasion is? 10% of the relevant tax evaded.
Q101: What is the penalty to a tax return preparer who assists clients in engaging in evasive tax? practices?
Choose the correct answer.
A.the greater of? $1,000 and the penalty assessed on the tax return? preparer's client for evading tax
B.two years in prison
C.$100,000
D.50% of the amount of tax avoided
Q102: What is the penalty for intentionally disregarding the Income Tax Act and understating? tax?
Choose the correct answer.
A.the lesser of? $1,000 and? 50% of the understated tax
B.$200
C.the greater of? $100 and? 50% of the understated tax
D.50% of the understated tax
Q103: The main purpose of the general? anti-avoidance rule? (GAAR) is to
Choose the correct answer.
A.provide legislation that can be used to enforce the concept of tax avoidance.
B.provide a definition for the? term, "tax? avoidance".
C.provide legislation that can be used to enforce tax evasion.
D.provide legislation that can be used to apply civil penalties on? taxpayer's guilty of tax evasion.
Q104: If an individual taxpayer disagrees with the assessment or reassessment of their income tax? return, the first step is to
Choose the correct answer.
A.appeal the assessment or reassessment at the Federal Court of Appeal.
B.file a formal objection to a notice of assessment? (Form T400A) with Canada Revenue Agency.
C.take the matter to the Tax Court of Canada under the informal procedure.
D.contact Canada Revenue Agency to informally request a change to the income tax return.
Q105: When a taxpayer disagrees with? CRA's interpretation of the Income Tax? Act, what options does the taxpayer? have?
Choose the correct answer.
A.file a court case to have a court make the final decision
B.none, since the? CRA's interpretation is final
C.escalate the issue to the Minister of Finance
D.ask for an interpretive ruling from the House of Commons
Q106: Which of the following are acceptable methods of filing a corporate tax return for a corporation with gross revenues of? $10 million?
Choose the correct answer.
A.paper file or electronic file
B.paper file only
C.electronic file or magnetic media
D.electronic file only
Q107: Which of the following is the tax return used by corporations to report their income tax liability in? Canada?
Choose the correct answer.
A.T2
B.T3
C.T4
D.T1
Q108: The normal filing due date for a corporate tax return is? ________.
Choose the correct answer.
A.April 30th of the following year
B.6 months after the end of the? corporation's fiscal year
C.June 15th of the following year
D.4 months after the end of the? corporation's fiscal year
Q109: In the case of a publicly held Canadian? corporation, any amount of tax due that was not paid through required installments is due? ________.
Choose the correct answer.
A.within 3 months of the fiscal year end
B.within 2 months of the fiscal year end
C.on the filing due date of the tax return
D.within 4 months of the fiscal year end
Q110: If a public corporation is required to make installment payments of estimated? tax, how often are the installment payments? made?
Choose the correct answer.
A.quarterly
B.monthly
C.weekly
D.semi-annually
Q111: ABC Corporation is a public corporation with a year end of December 31st. The company files its tax return on February 28th of the following?year, and the return indicates ABC will receive a tax refund. When will interest start accumulating on the refund due to ABC? Company?
Choose the correct answer.
A.6 months after December 31st
B.120 days after December 31st
C.30 days after February 28th
D.Never, interest does not accumulate on a refund due to a taxpayer.
Q112: What is the maximum amount of time a taxpayer has to file a return to claim any portion of a refund due to the? taxpayer?
Choose the correct answer.
A.4 months from the year end
B.there is no time limit
C.6 months from the year end
D.3 years from the year end
Q113: Corporations are required to make estimated tax payments when? ________.
Choose the correct answer.
A.estimated taxes payable for the current year exceed? $3,000
B.estimated taxes payable for the current year and actual taxes payable for the prior year exceeded? $3,000
C.actual taxes payable for the prior year exceeded? $3,000
D.estimated taxes payable for the current year exceed? $10,000
Q114: There is? (are) ________ acceptable? method(s) of calculating installment payments for corporations.
Choose the correct answer.
A.4
B.1
C.2
D.3
Q115: The method a corporation uses to calculate estimated tax installments? ________.
Choose the correct answer.
A.is prescribed within the Income Tax Act based on each? corporation's particular situation
B.is determined by the? CRA, who subsequently notifies the corporation
C.can be based on any reasonable method the corporation chooses as long as it does not result in an underpayment
D.can be selected by the corporation from allowable alternatives
Q116: LMK Company, a Canadian public? company, has estimated taxes of $144,000 for the current? year, actual taxes payable of $48,000 for the previous year and actual taxes payable of $36,000 for the second previous year. Which of the following is the lowest required 1st installment?payment?
Choose the correct answer.
A.$3,000
B.$4,000
C.$4,200
D.$12,000
Q117: ________ involves strategies that seek to minimize taxes while complying with the letter and spirit of enacted tax legislation.
Choose the correct answer.
A.Tax avoidance
B.Tax compliance
C.Tax evasion
D.Tax planning
Q118: Which of the following statements BEST describes tax? avoidance?
Choose the correct answer.
A.Taxpayers who flee the country when they are informed of the? CRA's intent to audit their tax records.
B.Engaging in transactions that follow the letter of the law for the sole purpose of minimizing the amount of taxes paid by a taxpayer.
C.Willfully ignoring the letter and intent of the tax law in an attempt to minimize the amount of taxes paid by a taxpayer.
D.Employing strategies that follow the letter and intent of tax laws that seek to minimize the amount of taxes paid by a taxpayer.
Q119: When considering the? anti-avoidance rules within section 245 of the Income Tax? Act, the primary determinant of whether or not a transaction is an avoidance transaction is? ________.
Choose the correct answer.
A.if the transaction is legal
B.if the transaction resulted in a reduction of taxes payable to the taxpayer
C.if the transaction has a bona? fide, non-tax business purpose
D.if the transaction results in a tax benefit to the taxpayer
Q120: In accordance with ITA? 245(2), if a transaction is deemed to be an avoidance transaction under the general? anti-avoidance rules? (GAAR), which of the following will? happen?
Choose the correct answer.
A.The taxpayer will face imprisonment for a period not exceeding 2 years.
B.A penalty of? 50% of the underpaid tax on the transaction will be assessed.
C.The taxpayer will be denied the tax benefit that arose from the avoidance transaction.
D.The tax return preparer will be subject to a? $100 penalty.
Q121: Which of the following is a crime with the potential for prosecution in a criminal? court?
Choose the correct answer.
A.tax evasion
B.tax avoidance
C.tax planning
D.tax compliance
Q122: Penalties for tax evasion can be assessed on? ________.
Choose the correct answer.
A.both the taxpayer and tax return preparer
B.the taxpayer only
C.the tax return preparer only
D.the? taxpayer, tax return? preparer, and the attorneys that defend either party
Q123: If a paid tax preparer is found to have assisted a client in tax? evasion, the maximum penalty that the preparer can be assessed? is:
Choose the correct answer.
A.50% of the amount of tax avoided by the tax payer plus the compensation received for preparation of the return
B.$100,000 plus the compensation received for preparation of the return
C.$1,000 plus the compensation received for preparation of the return and not more than 1 year of imprisonment
D.$1,000 plus the compensation received for preparation of the return
Q124: In order for a corporation to be a Canadian Controlled Private Corporation? (CCPCs), ________.
Choose the correct answer.
A.it CANNOT have shareholders that are public corporations
B.it CANNOT be controlled by Canadian residents
C.it CANNOT have? non-resident shareholders
D.it CANNOT be controlled by Canadian public corporations
Q125: Canadian residents living in? ________ qualify for special deductions that are intended to offset the high cost of living in this area.
Choose the correct answer.
A.Labrador
B.Quebec
C.Toronto
D.Nova Scotia
Q126: Which of the following types of payments received by an individual taxpayer are deducted in computing taxable? income?
Choose the correct answer.
A.dividends received from taxable Canadian corporations
B.dividends received from owning shares of a qualified small business
C.workers' compensation payments
D.fishing income
Q127: In which of the following situations will the spousal credit be greatest for a married? couple?
Choose the correct answer.
A.Each spouse has net income for tax purposes of $26,000.
B.One spouse has net income for tax purposes of $54,000?, while the other spouse has net income for tax purposes of? $0.
C.One spouse has net income for tax purposes of $43,000?, while the other spouse has net income for tax purposes of $8,000.
D.An individual has net income for tax purposes of $26,000?, and the? individual's common-law partner has net income for tax purposes of $26,000.
Q128: Brian is 72 years old and has net income for tax purposes of $55,000. Assume that the limitation of the age tax credit begins at $37,500 and that the base amount of the credit is $7,000. What is the age tax credit for Brian under these? assumptions?
Choose the correct answer. Round to the nearest dollar.
A.$0
B.$7,000
C.$656
D.$2, 625
Q129: The basic tax? credit, spousal tax? credit, and Canada employment tax credit are all based on a credit rate of? ________ of a specified amount.
Choose the correct answer.
A.7%
B.15%
C.19%
D.10%
Q130: With regard to the medical expense? credit, which of the following is? correct?
Choose the correct answer.
A.Total qualifying medical expenses are reduced by the lesser of? 3% of the? taxpayer's net income in the year or an indexed amount in calculating the tax credit.
B.The portion of the qualifying medical expenses exceeding the threshold is multiplied by the highest federal income tax rate.
C.The tax credit is calculated based on the total qualifying medical expenses incurred by a taxpayer during the calendar year.
D.Qualifying medical expenses of the? taxpayer, minor children and spouse can be included in the calculation of the tax credit but medical expenses related to the? taxpayer's dependants over the age of 18 must be excluded.
Q131: With regard to the Old Age Security? Clawback, which of the following is? incorrect?
Choose the correct answer.
A.The Old Age Security Clawback is described in ITA? 180.2(2), which is located in Part 1 of the? Act, which is why the repayment of Old Age Security benefits are included as a deduction in the calculation of Part 1 taxes payable.
B.Old Age Security Clawback refers to the portion of Old Age Security benefits which must be repaid to the federal government when the?taxpayer's net income exceeds a certain threshold.
C.The Old Age Security Clawback is calculated as the lesser of the Old Age Security payments received and? 15% of the? taxpayer's net income in excess of a set threshold amount.
D.Old Age Security benefits received in the year are included in the computation of net? income, which is why the repayment of Old Age Security benefits are included as a deduction under? 3(c) in the calculation of net income.
Q132: Which of the following tax items is of most value in terms of tax savings to a? taxpayer?
Choose the correct answer.
A.a? $500 non-capital loss carry forward
B.a? $500 non-refundable credit against tax payable
C.a? $500 refundable credit against tax payable
D.a? $500 deduction against net income for tax purposes
Q133: Assume an individual is in the 20..5?% tax bracket. For this? individual, an additional $120 deduction allowable in calculating taxable income will reduce taxes payable by? ________. An additional $120 tax credit allowable will reduce taxes payable by? ________.
Choose the correct answer. ?(Round to the nearest? dollar.)
A.$120?, $25
B.$120?, $120
C.$25?, $25
D.$25?, $120
Q134: A taxpayer can use the lifetime capital gains deduction against? ________.
Choose the correct answer.
A.taxable capital gains from the sale of equities
B.taxable capital gains from the sale of qualified farming property
C.taxable capital gains from rental real estate properties
D.any taxable capital gain
Q135: With regard to federal income tax in? Canada, ________.
Choose the correct answer.
A.higher rates of tax are applied to higher levels of income using progressive tax brackets.
B.all residents of Canada are subject to the same flat tax rate which changes each year as it is indexed for inflation.
C.all residents of Canada are subject to several different flat taxes depending on their personal situation.
D.higher rates of tax are applied to lower levels of income using regressive tax brackets.
Q136: With regard to refundable tax? credits, ________.
Choose the correct answer.
A.if the taxpayer does not have tax payable for the year equal to or greater than the credit? amount, the excess credit amount is lost
B.if the taxpayer does not have tax payable for the year equal to or greater than the credit? amount, the entire amount of the credit is carried forward to a future taxable year
C.if the taxpayer does not have tax payable for the year equal to or greater than the credit? amount, the excess amount is paid as a refund to the taxpayer
D.if the taxpayer does not have tax payable for the year equal to or greater than the credit? amount, the excess credit amount is carried forward
Q137: What is the maximum federal tax rate levied on an? individual's taxable income for the current taxation? year?
Choose the correct answer.
A.33%
B.29%
C.15%
D.26%
Q138: Which of the following does NOT accurately describe the calculation of federal tax payable for? individuals?
A.The federal tax rates are? marginal, meaning that once taxable income reaches the next tax? bracket, all of the? individual's taxable income is taxed at the higher rate.
B.The federal tax brackets are indexed to the Consumer Price Index to account for inflation.
C.There are currently five federal tax? brackets, with rates ranging from? 15% to? 33%.
D.Progressive tax rates are applied to brackets? (or marginal? increments) of taxable income.
Q139: The eligible dependent credit is? ______________.
A.only available for single parents living with and supporting a child under the age of 18
B.most commonly claimed by single parents supporting a minor child who lives with them
C.equal to? 15% of the wholly dependent? person's income
D.available to all individual taxpayers supporting a wholly dependent person who lives with them
Q140: Which of the following BEST describes the Canada Caregiver? Credit?
A.The Canada Caregiver Credit is available for individual taxpayers who are supporting a? parent, child, or spouse with a mental or physical infirmity.
B.The Canada Caregiver Credit is available for individual taxpayers who are supporting some related individual because of that?individual's mental or physical infirmity.
C.The Canada Caregiver Credit is not available to any taxpayers who have claimed the extra base amount for the spouse or eligible dependent credit.
D.In order to qualify for the Canada Caregiver? Credit, the dependent relative must also qualify for the disability tax credit.
Q141: Which of the following statements related to the ITA? 118(3) Pension Income Tax Credit is NOT? correct?
A.The pension income tax credit is calculated based on eligible pension? income, which includes foreign and Canadian government pension income such as the Canada Pension Plan.
B.The pension income tax credit is calculated based on eligible pension? income, which specifically excludes Old Age Security and the Canada Pension? Plan, as well as certain provincial pension plans.
C.The pension income tax credit is equal to? 15% of the first? $2,000 of eligible pension income.
D.The pension income tax credit can be transferred to a spouse or? common-law partner if the taxpayer does not have enough taxes payable to use the credit.
Q142: The ITA? 118(10) Canada Employment Tax Credit? ____________.
A.is designed to provide an incentive for independent contractors to become employees
B.is calculated as? 15% of the? taxpayer's employment income in the current taxation year
C.is available to all employed and? self-employed individuals
D.is available to all individual taxpayers who have employment income in the current taxation year
Q143: Which of the following statements is NOT correct with respect to the ITA 118.01 Adoption Expenses Tax? Credit?
A.Eligible adoption expenses that qualify for the adoption expenses tax credit include fees paid to an adoption? agency, related travel expenses for the adoptive? parents, document translation? fees, and mandatory translation fees.
B.The adoption expenses tax credit is calculated as? 15% of eligible adoption expenses incurred up to an indexed base amount.
C.An? "eligible child" for purposes of the adoption expenses tax credit is a child under the age of 18 at the time that an adoption order is issued or recognized by a government in Canada in respect of the adoption of that child by that individual.
D.Where a couple? (either married or common? law) is adopting an eligible? child, the adoption expenses tax credit must be claimed by the?lower-income parent and cannot be shared.
Q144: The ITA 118.05 First Time Home? Buyer's Tax Credit? ______________.
A.applies to an individual who will be considered a? first-time home buyer if neither the individual or their spouse or? common-law partner owned and lived in another property in the current year or any preceding taxation year.
B.is available for all taxpayers who acquire a qualifying home in Canada during the current tax year
C.is equal to? 15% of the first? $10,000 of the cost of the qualifying home
D.is available for? first-time home buyers who acquire a qualifying home in Canada during the current tax year
Q145: Which of the following statements regarding the calculation of the ITA 118.1 Charitable Donations Tax Credit is? correct?
A.The amount of charitable donations eligible for the tax credit is limited to? 75% of the? taxpayer's net income for tax purposes.
B.For individuals not subject to the highest federal tax? rate, the credit is calculated as? 15% of the first? $200 of eligible gifts plus? 29% of eligible gifts in excess of? $200.
C.The credit is calculated as? 15% of total eligible gifts.
D.The amount of charitable donations eligible for the tax credit is limited to the? taxpayer's net income for tax purposes in the current year
Q146: Which of the following medical expenses does NOT qualify for the ITA 118.2 Medical Expense Tax? Credit?
A.Amounts paid for teeth whitening procedures
B.Amounts paid for guide dogs and specifically trained service animals
C.Amounts paid for dentures
D.Amounts paid for prescription eyeglasses or contact lenses
Q147: With regard to the ITA 118.3 Disability Tax? Credit, which of the following statements is? correct?
A.To qualify for the disability tax? credit, the individual must have a mental or physical impairment that significantly restricts the activities of daily living which will last for at least 12 months.
B.The disability tax credit is calculated as? 15% of the amounts paid for attendant care or supervision related to a disabled dependent.
C.The disability tax credit is available if a medical expense credit is claimed for a full time attendant or full time care in a nursing home.
D.The disability tax credit can only be transferred to a supporting related person who claimed the disabled individual for the ITA? 118(1)(b) eligible dependent credit.
the option price was equal to, or more than, the fair market value of the shares at the option
grant date.
However, if this condition is not met, an additional provision under ITA
110(1)(d.1) allows the taxpayer to deduct one-half of the employment income inclusion,
provided the shares are held for at least two years after their acquisition
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