TAX ASSIGNMENT 4 EXAM 2026|2027 QUESTIONS WITH DETAILED VERIFIED
ANSWERS (100% CORRECT) | ALREADY GRADED A+
The responsibility for collection of GST/HST when taxable supplies are purchased falls upon ________. -
Correct Answer -the provider of the supplies
With respect to zero-rated supplies, the ________. - Correct Answer -GST and HST rate are both zero
Which of the following are included in zero-rated supplies? - Correct Answer -basic groceries
What is the difference between zero-rated supplies and tax exempt supplies? - Correct Answer -Zero-
rated supplies are eligible for input tax credits, tax exempt supplies are not.
Businesses that supply only exempt supplies ________. - Correct Answer -are subject to GST/HST on
purchases of supplies used to operate their businesses
Which of the following is an example of an exempt supply? - Correct Answer -child care services
Which of the following BEST describes the concept of exempt supplies? - Correct Answer -Exempt
supplies are a specific list of goods and services which the government has identified as not subject to
GST/HST.
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,What is the basic purpose for input tax credits? - Correct Answer -to reduce the burden of double
taxation when a purchaser uses taxable supplies to in turn produce additional supplies that will be taxable
when sold
Which of the following parties would be eligible for input tax credits? - Correct Answer -A company that
produces and sells adult clothing for a profit.
In order for GST/HST paid on an expenditure to be eligible for ANY amount of input tax credit, ________%
of the expenditure must be related to a commercial activity. - Correct Answer -more than 10
Which of the following is currently the lowest overall rate of
tax (federal+provincial) assessed on the sale of taxable goods and services in any Canadian province? -
Correct Answer -5%
There are many factors that support the increased use of transaction taxes, such as GST and HST. Which
of the following is NOT one of those factors? - Correct Answer -Transaction taxes are a regressive form
of tax, which is considered more equitable than a progressive tax system.
Which of the following are included in fully taxable supplies for purposes of GST? - Correct Answer -
Cleaning services
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, Bridge Corp. operates in Alberta (a province that does not have PST or HST) and sells only fully taxable
and zero-rated supplies. Bridge Corp. reports the following amounts (net of any GST collected or paid) in
its financial records for the current year:
• Sales $1,250,000
($1,005,000 of sales was fully taxable supplies, the remaining was zero-rated)
• Cost of Goods Sold $ 810,000
(purchases of merchandise exceeded Cost of Goods Sold by $120,000, all merchandise purchased and
sold was fully taxable supplies)
• Depreciation expense $ 150,000
• Salaries and wages $ 270,000
• Capital expenditures $ 100,000
(purchase of furniture & fixtures used 70% for fully taxable supplies and 30% for zero-rated supplies)
Which of the following is the correct amount of GST payable (or refund) for Bridge Corp. in the current
year? - Correct Answer -$1,250 GST refund
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ANSWERS (100% CORRECT) | ALREADY GRADED A+
The responsibility for collection of GST/HST when taxable supplies are purchased falls upon ________. -
Correct Answer -the provider of the supplies
With respect to zero-rated supplies, the ________. - Correct Answer -GST and HST rate are both zero
Which of the following are included in zero-rated supplies? - Correct Answer -basic groceries
What is the difference between zero-rated supplies and tax exempt supplies? - Correct Answer -Zero-
rated supplies are eligible for input tax credits, tax exempt supplies are not.
Businesses that supply only exempt supplies ________. - Correct Answer -are subject to GST/HST on
purchases of supplies used to operate their businesses
Which of the following is an example of an exempt supply? - Correct Answer -child care services
Which of the following BEST describes the concept of exempt supplies? - Correct Answer -Exempt
supplies are a specific list of goods and services which the government has identified as not subject to
GST/HST.
1|Page
,What is the basic purpose for input tax credits? - Correct Answer -to reduce the burden of double
taxation when a purchaser uses taxable supplies to in turn produce additional supplies that will be taxable
when sold
Which of the following parties would be eligible for input tax credits? - Correct Answer -A company that
produces and sells adult clothing for a profit.
In order for GST/HST paid on an expenditure to be eligible for ANY amount of input tax credit, ________%
of the expenditure must be related to a commercial activity. - Correct Answer -more than 10
Which of the following is currently the lowest overall rate of
tax (federal+provincial) assessed on the sale of taxable goods and services in any Canadian province? -
Correct Answer -5%
There are many factors that support the increased use of transaction taxes, such as GST and HST. Which
of the following is NOT one of those factors? - Correct Answer -Transaction taxes are a regressive form
of tax, which is considered more equitable than a progressive tax system.
Which of the following are included in fully taxable supplies for purposes of GST? - Correct Answer -
Cleaning services
2|Page
, Bridge Corp. operates in Alberta (a province that does not have PST or HST) and sells only fully taxable
and zero-rated supplies. Bridge Corp. reports the following amounts (net of any GST collected or paid) in
its financial records for the current year:
• Sales $1,250,000
($1,005,000 of sales was fully taxable supplies, the remaining was zero-rated)
• Cost of Goods Sold $ 810,000
(purchases of merchandise exceeded Cost of Goods Sold by $120,000, all merchandise purchased and
sold was fully taxable supplies)
• Depreciation expense $ 150,000
• Salaries and wages $ 270,000
• Capital expenditures $ 100,000
(purchase of furniture & fixtures used 70% for fully taxable supplies and 30% for zero-rated supplies)
Which of the following is the correct amount of GST payable (or refund) for Bridge Corp. in the current
year? - Correct Answer -$1,250 GST refund
3|Page
