Exam 2: Procedures and Administration

A Canadian public corporation had federal taxes payable in 2018 and 2019 exceeding $3,000. One correct option it has with respect to its 2020 instalments is to pay:

One of your clients has received his instalment notice and has asked your advice as to whether he should make the payments. Provide the requested advice.

Without regard to whether an individual's filing due date is April 30 or June 15, any balance of tax owing must be paid by April 30.

Briefly describe the difference between tax evasion and tax avoidance.

If an individual believes that the amount of income taxes withheld by his employer is greater than the amount that he will have to pay in a particular year, he can make a request to the CRA to have his source deductions reduced.

Under what circumstances must an individual make income tax instalment payments during the current year?

Ms. Loren dies on February 1, 2021. All of her income is from employment activities and she does not have a spouse or common-law partner. What is the latest date for filing her 2020 income tax return?

How is interest on late instalments calculated?

For corporations, the filing deadline for tax returns is:

Marc Mayer filed his 2020 personal tax return on March 1, 2021. Neither he nor his spouse has business income in any year. The CRA mailed a Notice of Assessment to Marc dated May 5, 2021 and Marc received it on May 14, 2021. If Marc disagrees with the Notice of Assessment, he has until which one of the following dates to file a Notice of Objection?

Ms. Jeanine Farrel has 2020 Net Income which includes business income. When is her 2020 tax return due? In addition, indicate when any remaining tax liability must be paid in order to avoid having interest assessed on the amount due.

As his Taxable Income in 2019 was nil, Mark Felton did not make any instalment payments during 2020. In completing his return for 2020, he finds that he has tax payable of $22,500. While his normal filing date would be April 30, 2021, he does not file his return or pay the balance owing until September 12, 2021. What penalties and interest will be assessed for the 2020 taxation year?

For both tax and accounting purposes Ledux Inc. has a January 31 year end. Ledux is a publicly traded Canadian company. For the year ending January 31, 2018, Ledux Inc. had federal Tax Payable of $193,420. During the following year ending January 31, 2019, the federal Tax Payable was $215,567. While final figures are not available at this time, it is estimated that federal Tax Payable for the year ending January 31, 2020 will be $203,345. Required: A. Calculate the instalment payments that are required for the year ending January 31, 2020 under each of the alternative methods available. Indicate which of the alternatives would be preferable. B. If the Company did not make any instalment payments towards its 2020 taxes payable, and did not file its corporate tax return or pay its taxes payable on time, indicate how the interest and penalty amounts assessed against it would be determined (a detailed calculation is not required).

Which of the following statements with respect to corporations is NOT correct?

Ms. Ali, a self-employed music teacher with business income, dies on November 15, 2020. What is the latest filing date for her 2020 income tax return?

An individual can request that an employer reduce the amounts withheld for income taxes. What conditions must be met for this request to be granted? Provide an example of a situation where this request would be granted.

If a corporation that is a small CCPC is required to make quarterly instalment payments on their income taxes, how are the required amounts determined?

Lang Lang Ltd., a CCPC eligible for the small business deduction, has a March 31 year end. Due to the death of the owner/manager, the tax return for the year ended March 31, 2019 was not filed until May 12, 2021. The unpaid tax on March 31, 2019 was $15,500. Lang Lang Ltd. has never filed a return late before. What is the total late file penalty that the corporation is required to pay? (Do not include any interest payable.)

For its 2020 taxation year, its first year of operation, PS Swim Inc. filed its return three months late. The unpaid tax at the due date for the return was $2,500. This amount was not paid until the return was filed. What would its penalty be?

Interest and penalties may be waived or reduced in extraordinary circumstances, such as those involving natural disasters or serious illness.