Chapter 1: Intro to Federal Taxation in
Canada exam with complete solutions
Accountant's View of Income - ANSWER- Recognize revenue
Match expenses
GAAP based
Carry Forward Allowable Capital Losses - ANSWER- Unused capital losses can
be carried forward and used in the calculation of future taxable income
Charging Provision for Non-Residents ITA 2(3) - ANSWER- Types of Taxable
Income:
- Employment in Canada
- Carried on Business in Canada
- Disposition of Taxable Canadian Property
Corporate Income Tax - ANSWER- Similar system to personal
Levied on taxable income
Generally is collected by the federal government on behalf of the provinces
CRA View of Income - ANSWER- Employment income
Business income
Property income
Net taxable capital gains
Other inclusion and deductions
Deemed resident - ANSWER- Taxed as a resident
Economic Objectives of Tax - ANSWER- Resource allocation
Distribution effects
Stabilization effects
Fiscal federalism
, Economist's View of Income - ANSWER- Not very specific
Based on wealth or assets
Evaluation of Canada with the Qualitative Characteristics - ANSWER- Equity -
high income individuals and corporations pay little
Balance between sectors - heavy reliance on personal
Complexity - very complex and is become more so
Dependability of revenues - too much reliance on the resource sector
International competitiveness - with corporations was good and competitive with
the US; with individuals, not competitive with the US
HST = - ANSWER- GST + PST
Harmonized sales tax
Is administered by the federal government
Income Tax Act Part 1 - ANSWER- Division A - Liability for Tax
Division B - Net income for tax purposes
Division C - Taxable income
Division E - Tax payable
Individuals with Dual Residency - ANSWER- Tax treaties have tie breakers
Factors include:
- permanent home
- centre of vital interests
- habitual abode
- citizenship
ITA 3(a) - ANSWER- Includes positive income from:
- Employment
- Business
- Property
- Other positive, non-capital sources
Does NOT include employment, business, or property losses
ITA 3(b) - ANSWER- Includes
- Excess (if any) of taxable capital gains over allowable capital losses
- If losses > gains in current year, amount is nil
ITA 3(c) - ANSWER- The sum of ITA 3(a) and ITA 3(b)
Less division B, subdivision e deductions
Canada exam with complete solutions
Accountant's View of Income - ANSWER- Recognize revenue
Match expenses
GAAP based
Carry Forward Allowable Capital Losses - ANSWER- Unused capital losses can
be carried forward and used in the calculation of future taxable income
Charging Provision for Non-Residents ITA 2(3) - ANSWER- Types of Taxable
Income:
- Employment in Canada
- Carried on Business in Canada
- Disposition of Taxable Canadian Property
Corporate Income Tax - ANSWER- Similar system to personal
Levied on taxable income
Generally is collected by the federal government on behalf of the provinces
CRA View of Income - ANSWER- Employment income
Business income
Property income
Net taxable capital gains
Other inclusion and deductions
Deemed resident - ANSWER- Taxed as a resident
Economic Objectives of Tax - ANSWER- Resource allocation
Distribution effects
Stabilization effects
Fiscal federalism
, Economist's View of Income - ANSWER- Not very specific
Based on wealth or assets
Evaluation of Canada with the Qualitative Characteristics - ANSWER- Equity -
high income individuals and corporations pay little
Balance between sectors - heavy reliance on personal
Complexity - very complex and is become more so
Dependability of revenues - too much reliance on the resource sector
International competitiveness - with corporations was good and competitive with
the US; with individuals, not competitive with the US
HST = - ANSWER- GST + PST
Harmonized sales tax
Is administered by the federal government
Income Tax Act Part 1 - ANSWER- Division A - Liability for Tax
Division B - Net income for tax purposes
Division C - Taxable income
Division E - Tax payable
Individuals with Dual Residency - ANSWER- Tax treaties have tie breakers
Factors include:
- permanent home
- centre of vital interests
- habitual abode
- citizenship
ITA 3(a) - ANSWER- Includes positive income from:
- Employment
- Business
- Property
- Other positive, non-capital sources
Does NOT include employment, business, or property losses
ITA 3(b) - ANSWER- Includes
- Excess (if any) of taxable capital gains over allowable capital losses
- If losses > gains in current year, amount is nil
ITA 3(c) - ANSWER- The sum of ITA 3(a) and ITA 3(b)
Less division B, subdivision e deductions
