Solutions Manual for Introduction to Federal Income Taxation in Canada () 46th Edition By Julie Robson, Devan Mescall, Nathalie Johnstone, David Lin

CHAPTER1-INTRODUCTIONTOFEDERAL f f f f f




TAXINCANADAEXAM
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QUESTIONSWITHCORRECTANSWERS f f f




WhatdoesJthegov'tusetaxrevenuefor?-correctanswer--Forinitiativesofthegov't
f f f f f f f f f f f f f f




Breakdownofthegov'trevenuesJbysource-correctanswer-PersonalIncomeTaxJ-J50.1%Corporate f f f f f f f f f f f




Income Tax - 14.4%
f f f f




GST-11.4% f f




OtherSourcesJ-11.4%EI f f f




premiums-6.7%
f f f




OtherexciseJtaxes-1.8% f f f




Non-residentincometax-2.8% Custom f f f f f




andimportJdutiesJ-1.4%
f f f




whyispersonalincomeJtaxistheJgreatestsourceofrevenueforthegov't?-correctJanswer--
f f f f f f f f f f f f f




Ifacorporationhastoohighofarateoftaxitwon'tdobusinessinthecountry.AlowtaxrateJactsasanincentiveJforthe
f f f f f f f f f f f f f f f f f f f f f f f f f f




business
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-THINK:Corporationshigherindividuals.IndividualspaytaxonearningsJ-
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>JthereforethetaxresponsibilityisJtransferred. f f f f




Wasdoes"individual"meaninIncometaxJandGST-correctanswer-Humanbeing
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WhatJisa"Person"(taxableentities)inIncomeTax-correctanswer-Individual,Corporation,Trust
f f f f f f f f f f f f




WhatJisa"Person"(taxableentities)inGST/HST-Jcorrectanswer-
f f f f f f f f




Individual,Corporation,Trust,Partnership,Estates,Charities,Societies,Unions,Clubs,Associations,Commissions,
f f f f f f f f f f f




etc.
f




-SomeoftheentitiesthatareresponsibleforGST/HSTarenotresponsibleforincometax.
f f f f f f f f f f f f f f f




-
Forexample:Partnershipsdon'tpayincometaxasapartnership,rathertheindividualpartnerspaytaxasin
f f f f f f f f f f f f f f f f f




dividuals
f

, LegalFormsofaBusiness-correctanswer- f f f f f f f




soleproprietorship,partnership,corporation,trust(trusthas3parties,trustee,trustor,beneficiary)
f f f f f f f f f f f




Taxationandeconomicpoliciesallowfor:-Jcorrectanswer-- f f f f f f f




*Resourceallocation*:thisincludesnationaldefense,education,healthcare f f f f f f f f




- *Distributioneffects*:highertaxforhigherincome;lowertaxforlowerincome f f f f f f f f f f f




- *Stabilizationeffects*:publicspendingtostimulatetheeconomy f f f f f f f




->THINK:GivingpeoplemoneyintimesJoftroublesotheeconomydoesn'tJcollapse
f f f f f f f f f f f




- *FiscalFederalism*:transfertoprovincialandmunicipalgovernments
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QualitativeCharacteristicsJ-Jcorrectanswer-Thereisoftenatrade- f f f f f f




offbetweenequity,neutrality,adequacy,flexibility,simplicity&easeofcompliance,certainty,balancebetween
f f f f f f f f f f f f f f




sectors,internationalcompetitiveness
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BasicStructureoftheIncomeTaxAct-correctanswer-
f f f f f f f f f




Thereare19PartsbrokendownintoDivisionsJandSubdivisions.There281SectionsintheIncomeTaxAct.
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OtherIncometaxlegislationincludes-correctanswer-DraftlegislationIncome
f f f f f f f f f




Taxregulations
f f




TaxJTreaties



Draftlegislation-correctanswer- f f f f




Proposedintheannualfederalbudget,butmustthenbepassedbyParliament,whichcantakeconsiderabletime.Can
f f f f f f f f f f f f f f f f f f




beaparticularchallenge inanelectionyear
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Incometaxregulations-correctanswer- f f f f f




givesdetailsfortheadministrationandenforcementoftheIncomeTaxActaswellasprescribedrates.Defines
f f f f f f f f f f f f f f f f f f




requirements for various classesJof persons.
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TaxJTreaties-correctanswer-- f f f




AgreementswithothercountriesthatJmayoverridetheJIncomeTaxJActinanattemptJtoJavoiddoubletaxation f f f f f f f f f f f f f




andtaxevasionbypersonsJthatmaybeconsideredresidentformorethanonejurisdiction.
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