Self Study And SSS Problems For Chapters 1 to 10 Volume 1 Page 1
Self Study And SSS Problems For Chapters 1 to 10
To provide practice in problem solving , these are the Self Study Problems for Volume 1 which
includes Chapters 1 to 10. The detailed solutions to these problems are available in both the
print and online Study Guide.
For additional practice in problem solving , there are Supplementary Self Study Problems with
detailed solutions available for each chapter. These problems and solutions are available in
this file after the Self Study problems for each Chapter.
Canadian Tax Principles - Self Study And SSS Problems (2018/2019)
,Chapter 1 Self Study Problems Volume 1 Page 2
Self Study Problem One - 2
Chapter 1 Self Study Problems
Self Study Problem One - 1
(Regressive Taxation)
A regressive tax can be described as one which is assessed at a lower rate as income levels
increase. Despite the fact that the Harmonized Sales Tax (HST) is based on a single rate, it is
referred to as a regressive form of taxation.
Required: Explain how a tax system with a single rate can be viewed as regressive.
SOLUTION available in printed and online Study Guide.
Self Study Problem One - 2
(Flat Rate Tax)
At a recent cocktail party, Mr. Right was heard complaining vehemently about the lack of prog-
ress towards tax simplification. He was tired of spending half of his time filling out various CRA
forms and, if the matter were left to him, he could solve the problem in 10 minutes. “It is
simply a matter of having one tax rate and applying that rate to 100 percent of income.”
Required: Discuss Mr. Right’s proposed flat rate tax system.
SOLUTION available in printed and online Study Guide.
Canadian Tax Principles - Self Study And SSS Problems (2018/2019)
,Chapter 1 Self Study Problems Volume 1 Page 3
Self Study Problem One - 3
Self Study Problem One - 3
(Qualitative Characteristics)
In recent years, the government has introduced a number of changes in tax legislation related
to individuals. A selected group of these measures can be described as follows:
Family Tax Cut This provision provided a tax reduction based on a limited amount
of income splitting . Specifically, a separate calculation of Tax Payable was based on
the assumption that up to $50,000 of Taxable Income was transferred from a higher
income spouse to a lower income spouse. It was only available to couples with a child
under the age of 18. This provision was repealed in 2016.
Lifetime Capital Gains Deduction An increase in the provision to remove from
Taxable Income, capital gains on the disposition of a qualified farming or fishing prop-
erty from $813,600 (2015 limit) to $1,000,000.
Home Accessibility Tax Credit A new credit against Tax Payable equal to 15
percent of up to $10,000 in expenditures made by seniors and disabled people to gain
access to, be more mobile within, or reduce the risk of harm within, their home.
Small Business Rate A reduction scheduled for 2016 (2 years in the future) in the
federal tax rate on active business income earned by Canadian Controlled Private
Companies. The rate was reduced from 11 percent of Taxable Income to a new rate
equal to 10.5 percent of Taxable Income.
Increase In Tax Free Savings Account (TFSA) Limits The TFSA provision allows
non-deductible contributions to be made to a registered account where earnings
accumulate on a tax free basis. Withdrawals from these accounts are not taxed. The
annual limit on contributions to Tax Free Savings Accounts (TFSAs) was increased from
$5,500 to $10,000 for 2015. This increase was reversed in 2016.
Required: Analyze each of the described changes using two of the qualitative characteris-
tics of tax systems that are listed in your text. For your convenience, the list of qualitative
characteristics presented in the text is as follows:
• equity or fairness
• neutrality
• adequacy
• elasticity
• flexibility
• simplicity and ease of compliance
• certainty
• balance between sectors
• international competitiveness
SOLUTION available in printed and online Study Guide.
Canadian Tax Principles - Self Study And SSS Problems (2018/2019)
, Chapter 1 Self Study Problems Volume 1 Page 4
Self Study Problem One - 6
Self Study Problem One - 4
(Sources Of Tax Information)
The principal source of Canadian income tax information is the Income Tax Act. There are,
however, other sources that are of considerable significance in the application of these rules.
Required: List and briefly describe these other sources of information on Canadian income
tax matters.
SOLUTION available in printed and online Study Guide.
Self Study Problem One - 5
(Residential Ties)
Paul Brossard accepts an offer to move to the U.S. from Canada to become a manager for a
revitalized Black Hills Gold Savings and Loan branch in South Dakota. Paul has resigned from
his Canadian federal government position, and severed his professional association ties.
Further, he purchased a home in South Dakota. However, his daughter is nearing completion
of an elite French immersion secondary school program in Ottawa, so Paul’s wife and
daughter intend to remain in Canada for two years. They continue to live in the family home in
Ottawa.
After six months in South Dakota, the Savings and Loan branch closed. Paul then sold the U.S.
home and moved back to Canada.
Required: Assess whether or not Paul became a non-resident of Canada, and if Paul will be
taxed in Canada for the period during which he was living and working in the U.S.
SOLUTION available in printed and online Study Guide.
Self Study Problem One - 6
(Part Year Residency Of Individuals)
The following facts relate to three individuals who spent a part of the current year in Canada:
Mr. Aiken Mr. Aiken is a businessman and a U.S. citizen who moved to Canada and
established residence in the middle of June. After the move, he spent the remaining
192 days of the year in Canada.
Mr. Baker Mr. Baker is a businessman and a Canadian citizen who moved out of
Canada in the middle of July and established residence in the U.S. Prior to his move,
he spent the preceding 192 days of the year in Canada.
Mr. Chase Mr. Chase is a professional athlete and a U.S. citizen. His residence is
located in Nashville, Tennessee, and during most of the year his wife and children live
in that city. Mr. Chase plays for a Canadian team and, during the current year, his work
required him to be in Canada for a total of 192 days.
Required: All of the preceding individuals were in Canada for a total of 192 days. Explain
their residence status for income tax purposes in the current year and their liability for Cana-
dian income taxes.
SOLUTION available in printed and online Study Guide.
Canadian Tax Principles - Self Study And SSS Problems (2018/2019)
Self Study And SSS Problems For Chapters 1 to 10
To provide practice in problem solving , these are the Self Study Problems for Volume 1 which
includes Chapters 1 to 10. The detailed solutions to these problems are available in both the
print and online Study Guide.
For additional practice in problem solving , there are Supplementary Self Study Problems with
detailed solutions available for each chapter. These problems and solutions are available in
this file after the Self Study problems for each Chapter.
Canadian Tax Principles - Self Study And SSS Problems (2018/2019)
,Chapter 1 Self Study Problems Volume 1 Page 2
Self Study Problem One - 2
Chapter 1 Self Study Problems
Self Study Problem One - 1
(Regressive Taxation)
A regressive tax can be described as one which is assessed at a lower rate as income levels
increase. Despite the fact that the Harmonized Sales Tax (HST) is based on a single rate, it is
referred to as a regressive form of taxation.
Required: Explain how a tax system with a single rate can be viewed as regressive.
SOLUTION available in printed and online Study Guide.
Self Study Problem One - 2
(Flat Rate Tax)
At a recent cocktail party, Mr. Right was heard complaining vehemently about the lack of prog-
ress towards tax simplification. He was tired of spending half of his time filling out various CRA
forms and, if the matter were left to him, he could solve the problem in 10 minutes. “It is
simply a matter of having one tax rate and applying that rate to 100 percent of income.”
Required: Discuss Mr. Right’s proposed flat rate tax system.
SOLUTION available in printed and online Study Guide.
Canadian Tax Principles - Self Study And SSS Problems (2018/2019)
,Chapter 1 Self Study Problems Volume 1 Page 3
Self Study Problem One - 3
Self Study Problem One - 3
(Qualitative Characteristics)
In recent years, the government has introduced a number of changes in tax legislation related
to individuals. A selected group of these measures can be described as follows:
Family Tax Cut This provision provided a tax reduction based on a limited amount
of income splitting . Specifically, a separate calculation of Tax Payable was based on
the assumption that up to $50,000 of Taxable Income was transferred from a higher
income spouse to a lower income spouse. It was only available to couples with a child
under the age of 18. This provision was repealed in 2016.
Lifetime Capital Gains Deduction An increase in the provision to remove from
Taxable Income, capital gains on the disposition of a qualified farming or fishing prop-
erty from $813,600 (2015 limit) to $1,000,000.
Home Accessibility Tax Credit A new credit against Tax Payable equal to 15
percent of up to $10,000 in expenditures made by seniors and disabled people to gain
access to, be more mobile within, or reduce the risk of harm within, their home.
Small Business Rate A reduction scheduled for 2016 (2 years in the future) in the
federal tax rate on active business income earned by Canadian Controlled Private
Companies. The rate was reduced from 11 percent of Taxable Income to a new rate
equal to 10.5 percent of Taxable Income.
Increase In Tax Free Savings Account (TFSA) Limits The TFSA provision allows
non-deductible contributions to be made to a registered account where earnings
accumulate on a tax free basis. Withdrawals from these accounts are not taxed. The
annual limit on contributions to Tax Free Savings Accounts (TFSAs) was increased from
$5,500 to $10,000 for 2015. This increase was reversed in 2016.
Required: Analyze each of the described changes using two of the qualitative characteris-
tics of tax systems that are listed in your text. For your convenience, the list of qualitative
characteristics presented in the text is as follows:
• equity or fairness
• neutrality
• adequacy
• elasticity
• flexibility
• simplicity and ease of compliance
• certainty
• balance between sectors
• international competitiveness
SOLUTION available in printed and online Study Guide.
Canadian Tax Principles - Self Study And SSS Problems (2018/2019)
, Chapter 1 Self Study Problems Volume 1 Page 4
Self Study Problem One - 6
Self Study Problem One - 4
(Sources Of Tax Information)
The principal source of Canadian income tax information is the Income Tax Act. There are,
however, other sources that are of considerable significance in the application of these rules.
Required: List and briefly describe these other sources of information on Canadian income
tax matters.
SOLUTION available in printed and online Study Guide.
Self Study Problem One - 5
(Residential Ties)
Paul Brossard accepts an offer to move to the U.S. from Canada to become a manager for a
revitalized Black Hills Gold Savings and Loan branch in South Dakota. Paul has resigned from
his Canadian federal government position, and severed his professional association ties.
Further, he purchased a home in South Dakota. However, his daughter is nearing completion
of an elite French immersion secondary school program in Ottawa, so Paul’s wife and
daughter intend to remain in Canada for two years. They continue to live in the family home in
Ottawa.
After six months in South Dakota, the Savings and Loan branch closed. Paul then sold the U.S.
home and moved back to Canada.
Required: Assess whether or not Paul became a non-resident of Canada, and if Paul will be
taxed in Canada for the period during which he was living and working in the U.S.
SOLUTION available in printed and online Study Guide.
Self Study Problem One - 6
(Part Year Residency Of Individuals)
The following facts relate to three individuals who spent a part of the current year in Canada:
Mr. Aiken Mr. Aiken is a businessman and a U.S. citizen who moved to Canada and
established residence in the middle of June. After the move, he spent the remaining
192 days of the year in Canada.
Mr. Baker Mr. Baker is a businessman and a Canadian citizen who moved out of
Canada in the middle of July and established residence in the U.S. Prior to his move,
he spent the preceding 192 days of the year in Canada.
Mr. Chase Mr. Chase is a professional athlete and a U.S. citizen. His residence is
located in Nashville, Tennessee, and during most of the year his wife and children live
in that city. Mr. Chase plays for a Canadian team and, during the current year, his work
required him to be in Canada for a total of 192 days.
Required: All of the preceding individuals were in Canada for a total of 192 days. Explain
their residence status for income tax purposes in the current year and their liability for Cana-
dian income taxes.
SOLUTION available in printed and online Study Guide.
Canadian Tax Principles - Self Study And SSS Problems (2018/2019)
