CANADIAN INCOME TAXATION TEST BANK/ 2023
b b b b b b
BEST GUIDE
b
,CHAPTER 1 b
1) Whichbofbthebfollowingbisbnotbconsideredbtobbebabseparatebentitybforbtaxbpurposesbinb
Canada?
A) Anbindividual
B) Abproprietorship
C) Abcorporation
D) Abtrust
2) Whichbofbthebfollowingbattitudesbandbactionsbisbmostblikelybtobhelpbdecision-
makersbdevelopbanbefficientbapproachbtobtaxation?
A) Cashbflowsbshouldbbebconsideredbfrombabbefore-
taxbperspectivebwhenbmakingbdecisions.
B) Functionalbmanagersbshouldbnotbbebheldbresponsiblebforbthebtaxbeffectsbofbdecisionsb
withinbtheirbdivisions.
C) Taxbcostsbtobabbusinessbshouldbbebregardedbasbcontrollablebexpenses,bmuchblikebp
roductbcostsbandbsellingbcosts.
D) AllbmanagersbshouldbownbabcopybofbthebIncomebTaxbAct.
3) Whichbofbthebfollowingbstatementsbisbtrue?
A) Dividendsbpaidbbybabcorporationbarebdeductiblebbybthatbcorporationbandbarebabformbofbp
ropertybincomebforbthebrecipient.
B) Dividendsbpaidbbybabcorporationbarebdeductiblebbybthatbcorporationbandbarebabformbofbb
usinessbincomebforbthebrecipient.
C) Dividendsbpaidbbybabcorporationbarebnotbdeductiblebbybthatbcorporationbandbarebabformbo
fbbusinessbincomebforbthebrecipient.
D) Dividendsbpaidbbybabcorporationbarebnotbdeductiblebbybthatbcorporationbandbarebabformbo
fbpropertybincomebforbthebrecipient.
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,4) Whenbassessingbthebvaluebofbabcorporation,bthebmostbrelevantbinformationbthatbdecision-
bmakersbnormallybconsiderbis
A) thebpotentialbforbbefore-taxbprofits.
B) thebpotentialbforbafter-taxbprofits.
C) thebcurrentbcorporatebtaxbrate.
D) cashbflowbbefore-tax.
5) Incomebtaxbisbcalculatedbforbwhichbofbthebfollowingbjurisdictionalbgroups?
A) Municipal,bprovincial,bandbfederal
B) Municipal,bfederal,bandbforeign
C) Provincial,bfederal,bandbforeign
D) Municipal,bprovincial,bandbforeign
6) Twobinvestorbcorporationsbmaybnotbenterbjointlybintobwhichbofbthebfollowing?
A) Jointbventure
B) Partnership
C) Separatebcorporation
D) Proprietorship
7) Whichbofbthebfollowingbstatementsbisbtrue?
Versionb1 2
, A) Cashbflowbshouldbneverbbebcalculatedbonbanbafter-taxbbasis.
B) Thebtaxbcostbtobabbusinessbshouldbbebregardedbasbabcostbofbdoingbbusiness.
C) Incomebtaxbcannotbbebtreatedbasbabcontrollablebcost.
D) Thebvaluebofbanbenterprisebshouldbbebbasedbonbpre-taxbcashbflow.
8) Loganbholdsbab7%binterest-
bearingbdebtbinstrumentbinbGlowbCo.bGlowbCo.'sbtaxbratebisb27%,bandbLoganbisbinbab45%btaxbbra
cket.bWhichbofbthebfollowingbstatementsbisbcorrect?
A) Thebafter-taxbcostbofbthebdebtbinstrumentbisb5.11%btobGlowbCo.,bandbthebafter-
taxbvaluebtobLoganbisb3.85%.
B) Thebafter-taxbcostbofbthebdebtbinstrumentbisb5.11%btobGlowbCo.,bandbthebafter-
taxbvaluebtobLoganbisb3.15%.
C) Thebafter-taxbcostbofbthebdebtbinstrumentbisb1.89%btobGlowbCo.,bandbthebafter-
taxbvaluebtobLoganbisb3.15%.
D) Thebafter-taxbcostbofbthebdebtbinstrumentbisb7%btobGlowbCo.,bandbthebafter-
taxbvaluebtobLoganbisb7%.
9) Whichbofbthebfollowingblistsbaccuratelybnamesbthebfivebgeneralbincomebcategoriesbforbtaxbp
urposes?
A) Business,bInterest,bEmployment,bCapitalbGains,bOther
B) Business,bProperty,bEmployment,bCapitalbGains,bForeign
C) Business,bProperty,bEmployment,bCapitalbGains,bOther
D) Business,bProperty,bEmployment,bInvestments,bOther
10) Proprietorships,bcorporations,bpartnerships,blimitedbpartnerships,bjointbventures,bandbi
ncomebtrustsbareball
Versionb1 3
b b b b b b
BEST GUIDE
b
,CHAPTER 1 b
1) Whichbofbthebfollowingbisbnotbconsideredbtobbebabseparatebentitybforbtaxbpurposesbinb
Canada?
A) Anbindividual
B) Abproprietorship
C) Abcorporation
D) Abtrust
2) Whichbofbthebfollowingbattitudesbandbactionsbisbmostblikelybtobhelpbdecision-
makersbdevelopbanbefficientbapproachbtobtaxation?
A) Cashbflowsbshouldbbebconsideredbfrombabbefore-
taxbperspectivebwhenbmakingbdecisions.
B) Functionalbmanagersbshouldbnotbbebheldbresponsiblebforbthebtaxbeffectsbofbdecisionsb
withinbtheirbdivisions.
C) Taxbcostsbtobabbusinessbshouldbbebregardedbasbcontrollablebexpenses,bmuchblikebp
roductbcostsbandbsellingbcosts.
D) AllbmanagersbshouldbownbabcopybofbthebIncomebTaxbAct.
3) Whichbofbthebfollowingbstatementsbisbtrue?
A) Dividendsbpaidbbybabcorporationbarebdeductiblebbybthatbcorporationbandbarebabformbofbp
ropertybincomebforbthebrecipient.
B) Dividendsbpaidbbybabcorporationbarebdeductiblebbybthatbcorporationbandbarebabformbofbb
usinessbincomebforbthebrecipient.
C) Dividendsbpaidbbybabcorporationbarebnotbdeductiblebbybthatbcorporationbandbarebabformbo
fbbusinessbincomebforbthebrecipient.
D) Dividendsbpaidbbybabcorporationbarebnotbdeductiblebbybthatbcorporationbandbarebabformbo
fbpropertybincomebforbthebrecipient.
Versionb1 1
,4) Whenbassessingbthebvaluebofbabcorporation,bthebmostbrelevantbinformationbthatbdecision-
bmakersbnormallybconsiderbis
A) thebpotentialbforbbefore-taxbprofits.
B) thebpotentialbforbafter-taxbprofits.
C) thebcurrentbcorporatebtaxbrate.
D) cashbflowbbefore-tax.
5) Incomebtaxbisbcalculatedbforbwhichbofbthebfollowingbjurisdictionalbgroups?
A) Municipal,bprovincial,bandbfederal
B) Municipal,bfederal,bandbforeign
C) Provincial,bfederal,bandbforeign
D) Municipal,bprovincial,bandbforeign
6) Twobinvestorbcorporationsbmaybnotbenterbjointlybintobwhichbofbthebfollowing?
A) Jointbventure
B) Partnership
C) Separatebcorporation
D) Proprietorship
7) Whichbofbthebfollowingbstatementsbisbtrue?
Versionb1 2
, A) Cashbflowbshouldbneverbbebcalculatedbonbanbafter-taxbbasis.
B) Thebtaxbcostbtobabbusinessbshouldbbebregardedbasbabcostbofbdoingbbusiness.
C) Incomebtaxbcannotbbebtreatedbasbabcontrollablebcost.
D) Thebvaluebofbanbenterprisebshouldbbebbasedbonbpre-taxbcashbflow.
8) Loganbholdsbab7%binterest-
bearingbdebtbinstrumentbinbGlowbCo.bGlowbCo.'sbtaxbratebisb27%,bandbLoganbisbinbab45%btaxbbra
cket.bWhichbofbthebfollowingbstatementsbisbcorrect?
A) Thebafter-taxbcostbofbthebdebtbinstrumentbisb5.11%btobGlowbCo.,bandbthebafter-
taxbvaluebtobLoganbisb3.85%.
B) Thebafter-taxbcostbofbthebdebtbinstrumentbisb5.11%btobGlowbCo.,bandbthebafter-
taxbvaluebtobLoganbisb3.15%.
C) Thebafter-taxbcostbofbthebdebtbinstrumentbisb1.89%btobGlowbCo.,bandbthebafter-
taxbvaluebtobLoganbisb3.15%.
D) Thebafter-taxbcostbofbthebdebtbinstrumentbisb7%btobGlowbCo.,bandbthebafter-
taxbvaluebtobLoganbisb7%.
9) Whichbofbthebfollowingblistsbaccuratelybnamesbthebfivebgeneralbincomebcategoriesbforbtaxbp
urposes?
A) Business,bInterest,bEmployment,bCapitalbGains,bOther
B) Business,bProperty,bEmployment,bCapitalbGains,bForeign
C) Business,bProperty,bEmployment,bCapitalbGains,bOther
D) Business,bProperty,bEmployment,bInvestments,bOther
10) Proprietorships,bcorporations,bpartnerships,blimitedbpartnerships,bjointbventures,bandbi
ncomebtrustsbareball
Versionb1 3
