Personal and Corporate Tax

Question 1

David moved to Canada from Austria on February 20, 2018. Which of the following accurately describes David's tax status for 2018?

Question 1 options:

1) David will be taxed in Canada on all his worldwide income earned in 2018 because the time he spent in Canada exceeds 183 days.

2) David will be taxed in Canada on all his worldwide income earned in 2018, multiplied by the number of days spent in Canada and divided by 365.

3) David will be taxed in Canada on all his worldwide income earned from February 20, 2015 to December 31, 2018, except for gains or losses on the sale of capital property owned prior to entering Canada.

4) David will be taxed in Canada on all his worldwide income earned from February 20, 2018 to December 31, 2018.

Question 2

An auditor reviewing Amy's personal tax return sees that she purchased an RRSP to lower her personal taxes. Which of the following statements is true?

Question 2 options:

1) This transaction is an example of tax planning.

2) This transaction is an example of tax avoidance.

3) This transaction is an example of tax evasion.

4) This transaction does not fit any the above categories.

Question 3

Which of the following statements is true regarding the residence status of a person for tax purposes?

Question 3 options:

1) A corporation is a resident of Canada if it is incorporated in Canada, and an individual is a resident of Canada if she or he was born in Canada.

2) A corporation is a resident of Canada if its central "mind and management" is located in Canada, and an individual is a resident of Canada if she or he sojourns in Canada for 183 days or more.

3) A corporation is a resident of Canada if its controlling shareholders reside in Canada, and an individual is a resident of Canada if it is part of her or his "normal course of life" to be in Canada.

4) A corporation is a resident of Canada only if it carries on business in Canada, and an individual is a resident in Canada if it is part of her or his "normal course of life" to be in Canada.

Question 4

ABC Inc. is a private corporation incorporated in Canada in 1991. All of its income is derived from sources originating in New Zealand. All the ABC shareholders reside permanently in the United States, where they make all the major decisions for the company. Which of the following accurately describes ABC's tax status in Canada?

Question 4 options:

1) ABC is not a resident of Canada and is taxed in Canada only on income earned from its permanent establishment in Canada.

2) ABC is a resident of Canada and taxed in Canada on its world income.

3) ABC is not a resident of Canada and is not subject to tax in Canada.

4) ABC is not a resident of Canada but is subject to a withholding tax on dividends paid to its shareholders in the United States.

Question 5

Which of the following is not a "person" under the Income Tax Act?

Question 5 options:

1) Individual

2) Partnership

3) Corporation

4) Trust

Question 6

For corporations, the filing deadline for tax returns is:

Question 6 options:

1) April 30.

2) three months after the fiscal year end.

3) three months after the fiscal year end if the small business deduction is claimed, otherwise two months after the fiscal year end.

4) six months after the fiscal year end.

Question 7

Stella has lived and worked in Canada all her life. On February 1, 2018, she obtained a 2 year leave of absence from her Canadian employer and accepted a 20 month consulting contract in Austria. Stella stored her car in a friend's garage, leased her furnished home on a month to month basis, and maintained her investments in Canada. Which of the following best describes Stella's tax status in Canada for the 2018 taxation year?

Question 7 options:

1) Stella is taxable in Canada on her world income until February 1, 2018.

2) Stella is not taxable in Canada in 2018.

3) Stella is taxable in Canada on her world income until February 1, 2018 and only on her Canadian investment income for the remainder of 2018.

4) Stella is taxable in Canada on her world income during all of 2018.

Question 8

Individuals must file their income tax returns:

Question 8 options:

1) On a quarterly basis if self employed or spouse is self-employed.

2) June 15 if self-employed or spouse is self-employed.

3) If an individual's date of death is December 15, by April 30 of the following calendar year.

4) If an individual's date of death is November 15, by April 30 of the following calendar year.

Question 9

An auditor reviewing ABC Corporation discovered that $100,000 of corporate revenue was being deliberately recorded in the books as a debit to Bank and a credit to shareholders loan. Which of the following statements is true?

Question 9 options:

1) This transaction does not fit any the above categories.

2) This transaction is an example of tax planning.

3) This transaction is an example of tax avoidance.

4) This transaction is an example of tax evasion.

Question 10

Which of the following statements is true regarding the CRA's right to reassess an income tax return?

Question 10 options:

1) A tax return may be reassessed at any time if the taxpayer made any misrepresentation that is attributable to carelessness.

2) A tax return for a Canadian-controlled private corporation may be reassessed within four years of the date on which the original assessment was mailed.

3) A tax return for a public corporation may be reassessed within five years of the date on which the original assessment was mailed.

4) A tax return for an individual may be reassessed within four years of the date on which the original assessment was mailed.