CH.1 INTRODUCTION TO FEDERAL
TAXATION IN CANADA QUESTIONS
WITH CORRECT ANSWERS |LATEST
UPDATE|
Who's required to pay income tax? - correct answer-Residents of Canada
Non-residents who:
- earn business or employment income in Canada
- realize gains on dispositions of certain types of property connected to Canada
How is income tax payable determined for an individual? - correct answer-
Step 1: Net income (Division B)
Step 2: Taxable income (Division C)
Step 3: Gross tax
Step 4: Personal tax credits
Taxable entities in Canada - correct answer-Individuals, corporations, and trusts
(Partnerships aren't a taxable entity, the income earned is taxed in the hands of the members)
Tax Exempt Entities - correct answer-
Municipal governments, labour organizations, registered charities, RRSP's, RESP's (Registered Education
Savings Plan), TFSAs (Tax-Free Savings Accounts)
Resource Allocation - correct answer-tax revenues use to provide public goods and services
Distribution Effects (Redistribution) - correct answer-Federal tax system redistributes income and wealth
Stabilization Effects - correct answer-
Tax policy used to encourage economic expansion, increase employment, and maintain inflation level
, FiscalAFederalismA-AcorrectAanswer-AllocateAresourcesAamongAdifferentAgovernmentAlevels
ProgressiveASystemA-AcorrectAanswer-
taxArateAincreasesAasAtheAtaxAbaseAincreasesAMoreAmoneyAmade,AmoreAmoneyApaid
Example:AIncomeATax
RegressiveASystemA-AcorrectAanswer-
NoAmatterAyourAincome,AyouApayAtheAsameAasAeveryoneAelseA(meaningAtaxAaffectsAlowerAincomeAindividu
AalsAmoreAthanAhighAincomeAindividuals)
Example:AHSTA($1.50AonAaApizzaAdoesn'tAharmAsomeoneAwhoAearnsA$1.5MAaAyear,AbutAcanAforAsomeoneA
wAhoAearnsA$40k)
FlatATaxARateASystemA-AcorrectAanswer-
AtAaA0%AtaxArate,AtheAgovernmentAearnsAnothing.AAtAaAhighAtaxArate,AtheAgovernmentAgetsAaAlowAamount.
AThere'sAaAsweetAspotAforAaAtaxArateAwhereApeopleAdon'tAmindApayingAtax,AbutAifAyouApushApastAthat,Athey
'llAjustApayAcashAorAsomethingAbecauseAtheyAcan'tAaffordAto/don'tAwantAtoApayAthatAtax.
LikeAaAregressiveAsystem,AthisAbenefitsAtheArich.
DivisionsA-AcorrectAanswer-
DivisionAA:ALiabilityAforATaxA(ITAA2)ADivisionAB:ANetAincomeA(IT
AA3-108)
DivisionAC:ATaxableAincomeA(ITAA109-114)
DivisionAD:ATaxableAincome,Anon-residentA(ITAA115-
116)ADivisionAE:ATaxesAPayableA(ITAA117-127)
WhenAmightAaAnon-residentAbeAtaxedAinACanada?A-AcorrectAanswer-InAtheAtaxationAyear,Athey:
- wereAemployedAinACanada
- carriedAonAaAbusinessAinACanada
- disposedAofAaAtaxableACanadianAproperty
TAXATION IN CANADA QUESTIONS
WITH CORRECT ANSWERS |LATEST
UPDATE|
Who's required to pay income tax? - correct answer-Residents of Canada
Non-residents who:
- earn business or employment income in Canada
- realize gains on dispositions of certain types of property connected to Canada
How is income tax payable determined for an individual? - correct answer-
Step 1: Net income (Division B)
Step 2: Taxable income (Division C)
Step 3: Gross tax
Step 4: Personal tax credits
Taxable entities in Canada - correct answer-Individuals, corporations, and trusts
(Partnerships aren't a taxable entity, the income earned is taxed in the hands of the members)
Tax Exempt Entities - correct answer-
Municipal governments, labour organizations, registered charities, RRSP's, RESP's (Registered Education
Savings Plan), TFSAs (Tax-Free Savings Accounts)
Resource Allocation - correct answer-tax revenues use to provide public goods and services
Distribution Effects (Redistribution) - correct answer-Federal tax system redistributes income and wealth
Stabilization Effects - correct answer-
Tax policy used to encourage economic expansion, increase employment, and maintain inflation level
, FiscalAFederalismA-AcorrectAanswer-AllocateAresourcesAamongAdifferentAgovernmentAlevels
ProgressiveASystemA-AcorrectAanswer-
taxArateAincreasesAasAtheAtaxAbaseAincreasesAMoreAmoneyAmade,AmoreAmoneyApaid
Example:AIncomeATax
RegressiveASystemA-AcorrectAanswer-
NoAmatterAyourAincome,AyouApayAtheAsameAasAeveryoneAelseA(meaningAtaxAaffectsAlowerAincomeAindividu
AalsAmoreAthanAhighAincomeAindividuals)
Example:AHSTA($1.50AonAaApizzaAdoesn'tAharmAsomeoneAwhoAearnsA$1.5MAaAyear,AbutAcanAforAsomeoneA
wAhoAearnsA$40k)
FlatATaxARateASystemA-AcorrectAanswer-
AtAaA0%AtaxArate,AtheAgovernmentAearnsAnothing.AAtAaAhighAtaxArate,AtheAgovernmentAgetsAaAlowAamount.
AThere'sAaAsweetAspotAforAaAtaxArateAwhereApeopleAdon'tAmindApayingAtax,AbutAifAyouApushApastAthat,Athey
'llAjustApayAcashAorAsomethingAbecauseAtheyAcan'tAaffordAto/don'tAwantAtoApayAthatAtax.
LikeAaAregressiveAsystem,AthisAbenefitsAtheArich.
DivisionsA-AcorrectAanswer-
DivisionAA:ALiabilityAforATaxA(ITAA2)ADivisionAB:ANetAincomeA(IT
AA3-108)
DivisionAC:ATaxableAincomeA(ITAA109-114)
DivisionAD:ATaxableAincome,Anon-residentA(ITAA115-
116)ADivisionAE:ATaxesAPayableA(ITAA117-127)
WhenAmightAaAnon-residentAbeAtaxedAinACanada?A-AcorrectAanswer-InAtheAtaxationAyear,Athey:
- wereAemployedAinACanada
- carriedAonAaAbusinessAinACanada
- disposedAofAaAtaxableACanadianAproperty
