Chpt 1 - Book

Question 1

Who Pays Income Tax?

Answer 1

canadian residents and sometimes non-residents if they receive income

Question 2

What Is the Tax Base?

Answer 2

the amount to which the tax rates are applied e.g. in canada the tax base is taxable income

Question 3

What Are General Exemptions?

Answer 3

any rule or provision in income tax legislation that reduces a taxpayer’s liability for income tax by making certain sources of income or certain taxpayers exempt from tax.

Question 4

what are the Underlying Objectives of the ITA

Answer 4

Neutrality, Equity, Simplicity, International Competitiveness, Adequacy, Flexibility

Question 5

Neutrality

Answer 5

A neutral income tax system is one which does not interfere with the decision-making process of taxpayers.

Question 6

Simplicity

Answer 6

One objective of the tax system is to ensure the tax legislation is understood by all taxpayers.

Question 7

Adequacy

Answer 7

Income tax is the largest and most significant source of revenue for the Government of Canada. As such, it is very important that the income tax system in Canada be structured in a manner to provide sufficient and consistent funding to the Canadian government.

Question 8

Section 2(1) of ITA states

Answer 8

resident persons pay tax on
world income every year.

Question 9

Section 2(3) of ITA states

Answer 9

nonresidents pay tax on
Canadian income if:
– employed in Canada
– carried on business in Canada
– disposed of property

Question 10

As of section 2(2) of ITA, what is taxable income (tax base) composed of

Answer 10

taxpayer’s income plus additions or deductions

Question 11

does the term person include corporations and trusts?

Answer 11

Yes

Question 12

what are the requirements to be an ordinary resident

Answer 12

family ties, residential ties (own permanent residence?), secondary residential ties (bank accounts etc..)

Question 13

conditions to be a deemed resident

Answer 13

The individual “sojourns” in Canada.
The individual sojourns for 183 days or more.

Question 14

what are the 4 types of resident you can be in canada

Answer 14

deemed resident, full time resident, part time resident, non-resident

Question 15

what are the 4 types of income amounts

Answer 15

employment income, business income, property income, other income

Question 16

what is the structure that the ITA can be read in

Answer 16

Part, division, subdivision, section, subsection, paragraph, subparagraph, clause, subclause

Question 17

list the 4 ITA provisions

Answer 17

persons covered, circumstances, time period, and consequences.

Question 18

when is a corporation deemed resident?

Answer 18

if the company is incorporated in canada

Question 19

when is a corporation deemed common-law?

Answer 19

when the board of directors meet and discuss in canada

Question 20

If a corporation is non-resident, when does it pay tax

Answer 20

if it carried business in canada, and if it disposed of property in canada

Question 21

if the corporation is non resident, does it have to pay tax on world income or only on canadian income?

Answer 21

only on canadian income