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| 1 | |
Which of the following statements describes the tax status of a corporation incorporated in Canada, carrying on a business both in Canada and in the US. In the US, the business is carried on through a branch operation. |
| | A) | The income earned in Canada, and US income, net of US tax, is taxable in Canada. |
| | B) | All the income of the corporation is taxable in Canada. |
| | C) | The Income earned in Canada and the gross US income, before expenses, is taxable in Canada. |
| | D) | Only the income earned in Canada is taxable in Canada. |
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| 2 | |
Which of the following factors is not relevant when the courts determine if an individual is a resident of Canada? |
| | A) | Their Canadian citizenship status. |
| | B) | The amount of time spent in Canada on a regular basis. |
| | C) | Their social and financial ties to Canada. |
| | D) | Their motivation for being in Canada. |
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| 3 | |
With respect to an individual, which of the following activities would not be considered business income? |
| | A) | Cutting the neighbours' lawns. |
| | B) | Renting out the basement apartment of one's house. |
| | C) | Watching over the neighbour’s pet while the neighbour is on vacation. |
| | D) | Teaching piano to students, on a part-time basis. |
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| 4 | |
Generally, income is considered passive if it is realized from… |
| | A) | Employment |
| | B) | Business |
| | C) | Property |
| | D) | Capital gains |
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| 5 | |
Which of the following statements describes the treatment of losses in the aggregating formula? |
| | A) | All losses, in all sections, are deductible against all sources of income. |
| | B) | All losses are included in section 3(d). |
| | C) | Losses in section 3(d) are deductible against all sources of income. |
| | D) | Losses in section 3(b) are deductible against all sources of income. |
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| 6 | |
Which of the following events would generally result in a capital gain? |
| | A) | The sale of an apartment building by a real estate construction company. |
| | B) | The sale of an apartment building by a real estate rental company. |
| | C) | A payment of a one-time bonus to an employee. |
| | D) | The receipt of alimony from a former spouse. |
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| 7 | |
The tax return filing deadline and the balance of tax due date for individuals, other than deceased individuals, is… |
| | A) | June 15th of the following year. |
| | B) | April 30th of the following year. |
| | C) | Either April 30 or June 15 (if the individual or their spouse carries on a business,) of the following year, as the filing deadline. April 30th of the following year is the balance of tax due date in all cases. |
| | D) | Either April 30 or June 15, (if the individual or their spouse carries on a business) of the following year. |
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| 8 | |
Which of the following entities pays tax on its taxable income for the year? |
| | A) | Proprietorship |
| | B) | Partnership |
| | C) | Joint venture |
| | D) | Corporation |
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| 9 | |
A non-resident individual would be subject to Canadian withholding tax on which type of Canadian sourced income? |
| | A) | Employment |
| | B) | Rents from properties |
| | C) | Business |
| | D) | Proceeds from the sale of certain properties. |
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| 10 | |
The Canada Revenue Agency's (CRA's) has the right to reassess a tax return… |
| | A) | Within four years from the date of the original notice of assessment for all corporations. |
| | B) | Within three years from the date of the original notice of assessment for all individuals and Canadian-controlled private corporations (CCPCs). |
| | C) | At any time and in all circumstances for all taxpayers. |
| | D) | Never, if CRA originally agrees no taxes were payable due to an overall loss being reported in the tax return. |
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| 11 | |
A Canadian corporation has a branch office in England. It earns CDN $1, 000, 000 and pays 40% UK taxes. The Canadian corporate tax rate is 25 %. Why would Canada not collect any taxes on the UK branch income? |
| | A) | Canada taxes only Canadian sourced income of Canadian corporations. |
| | B) | The UK would be responsible for paying Canada’s share of the taxes it collects, under the terms of the tax treaty between the two countries. |
| | C) | The UK tax rate is higher than the Canadian tax rate on the income. |
| | D) | Canada has no right to tax the income under the terms of the tax treaty between the two countries. |
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| 12 | |
An individual was the sole shareholder and employee of a corporation. In 20X5, she received employment income ($50, 000) and rental income ($12, 000) from the corporation. The corporation earned income of $100, 000, after the payment of the two amounts to the individual. What would be her income for 20X5? |
| | A) | $50, 000 |
| | B) | $62, 000 |
| | C) | $162, 000 |
| | D) | It would depend on the year end of the corporation. |
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| 13 | |
An individual received employment income ($50, 000) during 20X5. He had a 50 % interest in a partnership that realized a business loss of $120, 000 for the year ended 20X5. He also had a capital loss ($12, 000) and a capital gain ($5, 000). What would be the amounts of the capital loss and the partnership's business loss available for carry forward or back to other taxation years? |
| | A) | $3, 500, one-half of the $7, 000 net amount of the personal capital loss for the year. |
| | B) | $60, 000, his share of the partnership's loss. |
| | C) | $3, 500, one-half of $7, 000 net amount of the personal capital loss for the year, and $60, 000, his share of the partnership's loss. |
| | D) | $3, 500, one-half of the $7, 000 net amount of the capital loss for the year), and $10, 000, $60, 000 (his share of the partnership's loss) less $50, 000 applied against his 20x5 employment income. |
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