Chapter 1: Overview of Tax Parts and Liability

Question 1

What is Part XIII of the ITA concerned with?

Answer 1

Part XIII imposes an income tax on non-resident persons for certain payments made to them by a Canadian resident.

Question 2

What is Part IV of the ITA concerned with?

Answer 2

Part IV imposes an income tax on resident private corporations of 38-1/3% on taxable dividends received from other corporations.

Question 3

What is Part I.2 of the ITA concerned with?

Answer 3

Part I.2 imposes a tax on individuals receiving Old Age Security (OAS) as a means of recovering an overpayment of OAS payments if their income exceeded certain thresholds.

Question 4

What is Part X.1 of the ITA concerned with?

Answer 4

Part X.1 charges a tax as a form of penalty for those individuals who have overcontributed to their RRSPs.

Question 5

Who is subject to tax under ITA 2(1)?

Answer 5

Residents of Canada are subject to tax under Part I on all of their income, regardless of where it is earned. This is referred to as “Worldwide Income.”

Question 6

Who is subject to tax under ITA 2(3)?

Answer 6

Non-residents of Canada are only subject to tax under Part I if they are:

Employed in Canada,

Carry on business in Canada, or

Have disposed of certain types of property connected to Canada (referred to as “taxable Canadian property”).