Chapter 1

Question 1

What is the role of the federal government in Canadian taxation?

Answer 1

Initiates proposals for changes in tax legislation

The federal government plays a crucial role in shaping tax policies.

Question 2

Which department is responsible for drafting the wording of tax legislation in Canada?

Answer 2

Department of Finance

This department is key in formulating the language used in tax laws.

Question 3

What does the Canada Revenue Agency (CRA) do?

Answer 3

Administers and enforces tax laws

The CRA is the main body responsible for tax compliance in Canada.

Question 4

How do provincial and territorial tax systems relate to federal tax systems in Canada?

Answer 4

These tax systems parallel the federal systems

Provincial and territorial systems often align with federal taxation frameworks.

Question 5

In many cases, who administers the provincial and territorial tax systems in Canada?

Answer 5

The Canada Revenue Agency (CRA)

The CRA also manages certain provincial and territorial tax collections.

Question 6

What are factual full-time residents taxed on?

Answer 6

Taxed on worldwide income for the year.

Question 7

What are deemed full-time residents taxed on?

Answer 7

Taxed on worldwide income for the year.

Question 8

What are factual part-year residents taxed on?

Answer 8

Taxed on worldwide income for the part of the year they are resident in Canada.

Question 9

What are non-residents taxed on?

Answer 9

Taxed on Canadian-source income (employment income in Canada, business carried on in Canada, or disposal of taxable Canadian property).

Question 10

What types of income have withholding taxes applicable?

Answer 10

Most passive income such as dividends, rents, royalties, and so on (as well as interest in non-arm’s length situations).