Exam 1: Introduction to Federal Taxation in Canada

Mary Sothor is the Canadian ambassador to Tanzania. She was a resident of Canada immediately prior to her appointment as ambassador. Living with her in Tanzania's capital city are her husband and two children. Her husband was born in Canada and was a Canadian resident at the time of their marriage. He is exempt from Tanzanian taxation because he is the spouse of a foreign diplomat. Her 25 year old son was born in Canada and works for a Tanzanian company. His income exceeds $30,000 annually. Her 16 year old son was born in Kenya and is a full time student with no income of his own. Which of these individuals would be considered Canadian residents for tax purposes? Explain your conclusions.

Nixon Inc. was incorporated as an Ontario corporation in 2011. However, since 2014, all of the Company's business has been carried on outside of Canada. Determine the residency status of Nixon Inc.

Contributions to a Registered Retirement Savings Plan can be deducted to reduce the taxes of an individual in the year that they are made. However, these contributions will be subject to tax when they are withdrawn from the plan. What type of tax planning is involved in this arrangement?

If an individual moves to Canada and is here less than 183 days prior to the end of the year, that individual will be subject to Part I tax on their worldwide income for the entire year.

When an individual leaves Canada, the CRA may take the position that he has retained his residence status. What are the primary factors that the CRA will consider in determining whether such an individual has, in fact, ceased to be a Canadian resident?

Harvey Nicastro has current year net employment income of $45,000. In addition, he has the following additional sources of income, gains, and losses: • A loss from an unincorporated business of $23,000. • Interest income of $4,500. • A taxable capital gain of $13,500. • An allowable capital loss of $18,200. • Spousal support paid of $24,000. • A net rental loss of $14,500. Determine Harvey's minimum Net Income For Tax Purposes for the current year and indicate the amount and type of any loss carry overs that are available at the end of the year. Show all of your calculations.

Which of the following groups of entities are all subject to taxation on income?

What is the difference between tax avoidance and tax deferral?

The citation ITA 61(4)(b)(ii)would be read Paragraph 61, Subparagraph 4, Section b, Subsection ii.

Which of the following types of taxes is not currently in use by the federal government of Canada?

Ms. Tricia Jones makes contributions to a Registered Pension Plan sponsored by her employer. What type of tax planning is involved in this transaction? Explain your conclusion.

Joan Smith has Taxable Income of $37,500. For the current year her federal tax rate is 15 percent, while the corresponding provincial rate is 8.2 percent. Determine Ms. Smith's combined federal and provincial tax payable, before consideration of any available credits against Tax Payable.

Of the persons described, which one would NOT be considered a Canadian resident?

Of the following individuals, who would be considered a part-year resident of Canada for the current taxation year?

The major source of federal revenues is the personal income tax. Indicate three other types of taxes that contribute to federal revenues.

Which of the following statements with respect to the relationship between accounting Net Income and Net Income For Tax Purposes is NOT correct?

The government pays a Canada Child Benefit to the parents of children who are under 18 years of age. The payments are reduced by a percentage of income in excess of a specified level. What objectives are achieved by this benefit system?

Minjie Liu has the following sources of income and deductions: What is Minjie's Net Income for Tax Purposes?

If an individual leaves Canada for a temporary absence, this raises the question of whether he was a Canadian resident during the period of absence, particularly if some residential ties have been retained. What are the major factors that are considered in determining whether an individual continues to be a Canadian resident during a temporary absence?

An income tax is payable for each taxation year on the Taxable Income of every person resident in Canada at any time in the year.