Q1) ABC Inc. incurred the following expenses:

Printing and advertising costs for marketing $5,000

Membership fee for a golf club $4,000

What is the total amount of deductible expenses for ABC for tax purposes?

1) $4,000

2) $ 5,000

3) $ 9,000

4) $ 1,000

Q2) Which off the following is a prohibited deduction in the calculation of business income for tax purposes?

1) Political contributions.

2) Landscaping.

3) Convention expenses.

4) RPP contributions.

Q3) Susan and Alan are students. During the summer, Susan worked for a painting company, painted 3 houses, and was paid $15 per hour by the company. Alan also painted 3 houses, but under contract to each of the owners for a fixed fee. Which of the following best describes the tax position of Susan and Alan?

1) Susan earned employment income and can deduct a limited number of expenses. Alan earned business income and, subject to some limitations, may be able to deduct most expenses incurred to earn that income.

2) Both Susan and Alan earned business income and can deduct expenses incurred to earn their income.

3) Both Susan and Alan earned employment income, and income tax must be withheld from their remuneration by the payer.

4) Susan earned employment income and Alan earned business income. Both Susan and Alan must have income tax withheld from their remuneration by the payer.

Q4) Ten years ago, Sam purchased a piece of land for $50,000. His intention at that time was to build a rental building on the land and use it to earn rental income, which he did four years ago. In the current year, he sold the land and building for $10,000 and $80,000 respectively after receiving an unsolicited offer. Based on these facts, which one of the following is true?

1) The CRA may argue that the gain on the sale of the land is business income because of the unsolicited offer for sale.

2) The gain on sale of land is likely a capital gain for income tax purposes.

3) The CRA may argue that the gain on the sale of the land is business income because of the 10-year holding period on the land.

4) The CRA is likely to view this gain as a property income.