Chapter 4- Tax Concepts

Question 1

Excise tax

Answer 1

Is special tax levied on certain consumer products such as cigarettes, alcohol, and gasoline

Question 2

Capital asset

Answer 2

Any asset that is acquired and held for the purpose of generating income

Question 3

WITB

Answer 3

A refundable tax credit intended to provide tax relief for edible working low-income individuals

Question 4

Employment insurance

Answer 4

Government benefits that are payable for periods do of time when you are way from work due to specific situations

Question 5

Why should students file a tax return

Answer 5

Could be eligible for a refundable GST
if you have a common law
Can get a education, textbook tax credit

Question 6

Overview of completing income tax

Answer 6

1. Calculate total income
2. Subtract deduction
3. Calculate taxable income
4. Calculate net federal tax
5. calculate net provincial tax payable
6. Calculate total tax payable
7. Determine total tax already paid

Question 7

What is a clawback?

Answer 7

Used to reduce a particular government benifit provided to taxpayer who have income that exceeds a certain threshold amount.

Question 8

Tax planning

Answer 8

Involved activities and transactions that reduce or eliminate tax

Question 9

tax advance

Answer 9

Ocurs when tax payers legally apply tax law to reduce or eliminate taxes payable in ways that CRA considers
Potentially abusive of the spirit of the income tax act

Question 10

Tax evasion

Answer 10

Occurs when taxpayers attempt to deceive the CRA by knowingly reporting less tax

Question 11

Personal income tax

Answer 11

Taxes imposed on income earned

Generally paid ad income is earned