1. Which of the following statements regarding GAAR is true?

Multiple Choice

• The purpose of GAAR is to catch tax evaders.

• When an avoidance transaction takes place, the anti-avoidance rule is automatically applied in all circumstances.

• Canada Revenue Agency states that "A transaction will not be an avoidance transaction if the taxpayer establishes that it is undertaken primarily for bona fide business, investment or family purposes."

• Individuals who organize their affairs in order to pay as little tax as possible will automatically be subject to GAAR.

2. The CEO at Big Company Corporation has decided to sell a piece of capital equipment after the company's year-end in order to avoid paying capital gains tax this year. Which tax planning method will the CEO be using?

Multiple Choice

• Transferring income to another entity.

• Converting the nature of income from one type to another.

• Shifting income from one time period to another.

• This is a form of tax evasion and is not allowed.

3. Income tax is calculated for which of the following jurisdictional groups?

Multiple Choice

• Municipal, provincial, and federal

• Municipal, federal, and foreign

• Provincial, federal, and foreign

• Municipal, provincial, and foreign

4. Which of the following is not considered to be a separate entity for tax purposes in Canada?

Multiple Choice

• An individual

• A proprietorship

• A corporation

• A trust

Note- introduction to taxation