Chapter 1/2 - Structure + Liability for Tax

Question 1

Taxable Income

Answer 1

= Income for the year - the dedications permitted by Division C

Question 2

Full-Time Individual Resident (Common Law)

Answer 2

Criterion: a continuing state of relationship with Canada

The more ties the you have the more likely you are common law:

• A dwelling (Primary)
• A family (Primary)
• Personal Property and social ties (Secondary)

Full-time resident will be taxed on his worldwide income for the whole year

Question 3

Deemed Full-Time

Answer 3

Criterion: Sojourned in Canada in the year for an aggregate of 183 days or more

Full-time resident will be taxed on his worldwide income for the whole year

Sojourner rule does not apply in the year they cease or establish residency

Question 4

Part-time Resident

Answer 4

Criterion: “clean break” or “fresh start”

• Clean Break: you leave with little intention to come back
• Fresh Start: just moving to Canada during the year

Part-time resident will be taxed on his worldwide income for the part of the year while resident, and on his Canadian-source income for the part of year while non-resident

Question 5

Non-Resident

Answer 5

Is taxed on his/her income from

• Being employed in Canada
• Carrying on business in Canada
• Disposing of a taxable Canadian property, at any time in the year or previous year

Question 6

Residence of Corporation:

Deemed Resident

Answer 6

• Incorporated in Canada after April 26, 1965 or
• Central management and control in Canada (HQ, BOD) or
• Incorporated in Canada before April 27, 1965 and carrying on business in Canada in any year afterward

If deemed to be a resident at any time in the year, it is taxed on worldwide income for the whole year.

Question 7

Residence of Corporation: Non-resident

Answer 7

May be taxed on its Canadian source income

Question 8

A Family Tie

Answer 8

• A spouse or common law partner and other dependent members of immediate family remaining in Canada is an important tie

Question 9

Secondary Ties

Answer 9

• Multiple secondary ties, in combination with one of the primary ties indicates residence
• These include:
  Furniture
  Clothing
  Cars
  Medical insurance
  Active investment in Canadian Business
  Employment with Canadian employer

Question 10

Secondary Ties

Answer 10

• Multiple secondary ties, in combination with one of the primary ties indicates residence
• These include:
  Furniture
  Clothing
  Cars
  Medical insurance
  Active investment in Canadian Business
  Employment with Canadian employer
  Others

Question 11

Division A

Answer 11

Liability

Question 12

Division B

Answer 12

Computation of Income (NIFTP)

Question 13

Division C

Answer 13

Taxable Income

Question 14

Division D

Answer 14

Non-Residents

Question 15

Division E

Answer 15

Tax Payable

Question 16

Division E.1

Answer 16

Minimum Tax

Question 17

Division B. subdiv. a

Answer 17

Employment Income

Question 18

Division B. subdiv. b

Answer 18

Business and Property Income

Question 19

Division B. subdiv. c

Answer 19

Capital Gains/Losses

Question 20

Division B. subdiv. d

Answer 20

Other Income

Question 21

Division B. subdiv. e

Answer 21

Other deductions

Question 22

Division B. subdiv. f

Answer 22

Relevant Rules