Advanced Curriculum Chapter 1_Corporate Taxation and Structures

Question 1

BUSINESS STRUCTURES - What are the main types of business structures in Canada?

Answer 1

Sole proprietorships, partnerships (general, LP, LLP), corporations (private and public), holding companies, and professional corporations.

Question 2

SOLE PROPRIETORSHIPS - What are the key advantages and disadvantages of sole proprietorships?

Answer 2

Advantages: Simple structure, low cost. Disadvantages: Unlimited liability, no tax deferral, and ceases to exist upon owner’s death.

Question 3

PARTNERSHIPS - How is a general partnership different from an LLP?

Answer 3

General partnerships expose partners to full liability, while LLPs limit liability to the partner’s own actions.

Question 4

CORPORATE TAXATION - What is the Small Business Deduction (SBD)?

Answer 4

A reduced corporate tax rate on active business income up to a certain threshold, encouraging small business growth.

Question 5

INTEGRATION OF TAXATION - Why does Canada use integration in tax policy?

Answer 5

To ensure neutrality between income earned personally or through a corporation, minimizing double taxation.

Question 6

HOLDING COMPANIES - What are the benefits of using a holding company?

Answer 6

Tax deferral, asset protection, estate planning, and income splitting.

Question 7

PROFESSIONAL CORPORATIONS - Who can use professional corporations?

Answer 7

Doctors, lawyers, accountants, and dentists, with limited tax benefits compared to standard corporations.