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chapter 2 -Procedures And Administration - Multiple Choice

QUIZ 2 CHAPTER 2 Procedures And Administration - Multiple Choice Instructions: Submit answers only. Submit in columnar format on one side of an 8.5 by 11\" sheet of paper. Assignment is due at the beginning of class on the due date. There is an automatic 10% deduction for late submission or for not following the submission instructions. Due date: June 7th. Individual Filing Requirements 1. With respect to the filing of an individual income tax return, which of the following statements is correct? A. An individual is required to file an income tax return if their only source of income is business income, even if no tax is payable. B. An individual is required to file an income tax return if they have reached the age of 18 by the end of the year. C. If an individual has disposed of a capital property during the year, they are required to file an income tax return, even if no tax is payable. D. An individual is not required to file an income tax return if no tax is payable for the year. 2. For the 2015 taxation year, John Bookman had a taxable capital gain of $45,000 and a net business loss of $45,000, resulting in a Taxable Income of nil. Which of the following statements is correct? A. B. C. D. 3. John Barron is self-employed and plans to file his 2015 tax return on June 15, 2016. His balance-due day is: A. B. C. D. 4. April 30, April 30. June 15, April 30. April 30, June 15. June 15, June 15. Ms. Deveco's 2015 income tax return is due on April 30, 2016. While she is too busy to file her tax return on that date, she remits a cheque to the government for $10,000, her estimated amount of net tax owing on that date. She has never filed a late return before. She prepares and files her tax return on May 31, 2016. At this time, the return shows that her actual net tax owing was $9,800. Assuming that the interest rate applicable to late payment of taxes is one-half percent per month without daily compounding, how much will she owe in penalties and interest on the late filing? A. B. C. D. E. 6. April 30, 2015. April 30, 2016. June 15, 2016. June 15, 2015. Bunly Im is a self-employed hairdresser. Which of the following dates are correct for the date by which his tax return for a year must be filed (1st item) and his payment due date (2nd item)? A. B. C. D. 5. John is not required to file a tax return for 2015. John must file a tax return on or before June 15, 2016. John must file a tax return on or before December 31, 2016. John must file a tax return on or before April 30, 2016. $ 49. $490. $588. $637. Nil. Mr. Finlay, a retired individual whose only source of income was pension receipts, dies on August 15, 2015. By what date must Mr. Finlay's final tax return be filed? A. April 30, 2016. B. February 28, 2016. C. February 15, 2016. D. December 31, 2015. E. None of the above. 7. Ms. Ali, a self-employed music teacher with business income, dies on November 15, 2015. What is the latest filing date for her 2015 income tax return? A. B. C. D. 8. Mr. Khan, a self-employed construction contractor, dies on April 1, 2015. What is the latest filing date for his final tax return? A. B. C. D. 9. April 30, 2016. May 15, 2016. May 30, 2016. June 15, 2016. April 30, 2016. June 15, 2016. October 1, 2016. December 31, 2016. Ms. Loren dies on February 1, 2016. All of her income is from employment activities and she does not have a spouse or common-law partner. What is the latest date for filing her 2015 income tax return? A. B. C. D. April 30, 2016. June 15, 2016. August 1, 2016. June 30, 2016. 10. Greta died on September 10, 2015. She has never reported any business income. By what date must her final tax return be filed? A. B. C. D. April 30, 2016. April 30, 2017. March 10, 2016. June 15, 2016. Individual Instalments 11. Ms. Marston has net tax owing for 2013 of $4,500, net tax owing for 2014 of $8,000, and estimated net tax owing for 2015 of $7,500. If she wishes to pay the minimum total amount of instalments for the 2015 taxation year, her first payment on March 15 will be for what amount? A. B. C. D. Nil. $1,125. $1,875. $2,000. 12. Jason Marks has to pay his tax by instalments as a result of his significant investment income. His net tax owing in 2013 was $13,600. In 2014, it was $15,000. His estimate for 2015 is $17,000. If he decides to pay his 2015 tax instalments according to the prior year option, how much should he pay on September 15, 2015? A. B. C. D. $3,400. $3,750. $4,250. $6,500. 13. All of the following people will have to pay tax by instalments this year, except: A. Jane White, who received a one-time bonus of $60,000 last year and, because her employer had not deducted enough tax, found herself with net tax owing of $8,200. B. Karen Phillips, who has started to earn investment income, which resulted in net tax owing of $3,100 last year. Her investment income is expected to be even greater this year. C. Blake Fortin, who established a sole proprietorship two years ago. Blake had a very successful first year and, as result, he had net tax owing that year of $85,000. Business dropped in his second year, resulting in net tax owing of only $1,500. This year, business has picked up again and he expects to have net tax owing of $53,000. D. Terri Jones, who has had net taxable capital gains on real estate in excess of $40,000 in each of the last two years, and who expects to have similar gains this year. 14. Larry Short has self-employment income of $62,000 in 2015. Prior to this year, he was employed full-time and his employer's withholdings more than covered his tax liability for the year. Larry estimates that, based on his self-employment income, his net tax owing for 2015 will be $8,000. Which of the following statements is true? A. B. C. D. Larry must file his return for 2015 by April 30, 2016. Larry should pay instalments in 2015. Larry must pay his income tax for 2015 by June 15, 2016. If Larry has as much income in 2016 as he had in 2015, he will have to pay instalments during 2016. 15. Individuals are required to pay instalments: A. B. C. D. When net tax owing is over $3,000 for any one of the past two years. When net tax owing is over $3,000 for the current year and both of the two prior years. When net tax owing is over $3,000 for the current year and one of the two prior years. When net tax owing is over $3,000 for the current year only. 16. One way to ensure that no interest will be assessed for late instalments is: A. B. C. D. To pay the amounts provided by the CRA in their instalment reminder on or before the required dates. To pay the lowest amount calculated using the 3 alternative calculations on or before the required dates. To pay the estimated tax owing for the current year on the first instalment due date. To pay the average of the three amounts calculated using the 3 alternative calculations on or before the required dates. Interest and Penalties 17. Dora Chen has determined that her minimum tax instalments for 2015 are $8,000 per quarter. She also owes $30,000 on her credit card, which carries an interest rate of 20%. She has destroyed her credit card, so no more can be put on it. Dora is unable to pay both the entire instalment amounts and her credit card balance, but she does have $8,000 in cash each quarter for her debts. Which of the following would be the best choice for Dora from a financial planning perspective? A. Dora should pay off her credit card balance before making instalment payments. B. Dora must make all her instalment payments, even if it means she cannot pay anything off on her credit card this year. C. Dora should split her payments equally between the credit card balance and the instalment liability, in order to show the CRA that she is trying her best to meet her obligations to them. D. Dora should pay her first two instalments and then make payments on her credit card balance. 18. Lang Lang Ltd., a CCPC eligible for the small business deduction, has a March 31 year end. Due to the death of the owner/manager, the tax return for the year ended March 31, 2014 was not filed until May 12, 2016. The unpaid tax on March 31, 2014 was $15,500. Lang Lang Ltd. has never filed a return late before. What is the total late file penalty that the corporation is required to pay? (Do not include any interest payable.) A. B. C. D. $775 $2,635 $1,860 $3,720 19. Which of the following scenarios will result in a penalty being charged by the CRA? A. B. C. D. A taxpayer pays less than the required amount of instalments. A taxpayer who is owed a refund files their tax return late. A taxpayer who has a balance owing files their tax return late, with the payment enclosed. A taxpayer who has a balance owing files their tax return on time, but does not include a payment. Assessments And Appeals 20. Which of the following statements is NOT correct? A. When the person filing the return has made any misrepresentation due to neglect, carelessness or wilful default, the normal reassessment period can be extended beyond 3 years. B. A taxpayer can choose to file a waiver to extend the 3 year time limit. C. When a return has been reassessed once, no further reassessments are permitted. D. Reassessment can occur outside the normal reassessment period when reassessment within the normal period affects a balance outside of the normal period. 21. Which of the following is NOT one of the criteria that must be met before an adjustment to a previous year tax return is permitted? A. B. C. D. The CRA must be satisfied that the previous assessment was incorrect. The change is based on a successful appeal to the courts by another taxpayer. The taxpayer's return was filed within 3 years of the end of the year to which it relates. The reassessment must be made within the normal assessment period, or under certain permitted extensions to this period. 22. Tom Arnold filed his 2015 tax return on March 1, 2016. The CRA mailed a notice of assessment to Tom dated May 15, 2016, and Tom received it on May 30, 2016. If Tom disagrees with the notice of assessment, what is the latest date he has to file a notice of objection? A. B. C. D. E. 90 days from March 1, 2016. 90 days from April 30, 2016. 90 days from May 15, 2016. 90 days from May 30, 2016. None of the above. 23. Minnie Belanger is retired. She filed her 2015 tax return on March 5, 2016. She received a portion of the tax refund claimed and an assessment notice, dated April 19, 2016, which set out the difference between the amount claimed and the amount of the refund. As Minnie disagrees with the notice of assessment, she wishes to file a notice of objection. What is the latest date she has to file a notice of objection? A. B. C. D. E. March 5, 2017. April 19, 2017. April 30, 2017. July 18, 2016. June 15, 2017. 24. Marc Mayer filed his 2015 personal tax return on March 1, 2016. Neither he nor his spouse has business income in any year. The CRA mailed a Notice of Assessment to Marc dated May 5, 2016 and Marc received it on May 14, 2016. If Marc disagrees with the Notice of Assessment, he has until which one of the following dates to file a Notice of Objection? A. B. C. D. August 3, 2016. August 12, 2016. March 1, 2017. April 30, 2017. Tax Planning 25. Carice Martin is planning to sell a piece of capital equipment which can be sold for more than its cost. If she waits until after her company's year end to sell it, she is engaging in: A. B. C. D. tax evasion. tax avoidance. GAAR. tax planning