Module 2: Gross Income

Question 1

What is the starting point for calculating a taxpayer’s taxable income?

Answer 1

Determine their gross income.

Question 2

Section 1 of the Gross Income definition provides that…

Answer 2

A resident is required to declare worldwide receipts.

Question 3

What does it mean when ‘Only Interest Related to Earning Interest Can Be Deducted’

Answer 3

If you borrowed money to invest and earn interest, you can deduct the interest you paid on that loan.

Question 4

True or false: you cannot use the interest expense deduction to reduce your total taxable income amount below zero.

Answer 4

True

Question 5

If some of your interest income is tax-free, you must…

Answer 5

split the interest expense between taxable and non-taxable income

Question 6

What are the 6 components of gross income as defined?

Answer 6

. Period/year of assessment
. Total amount in cash/other, AND
. Accrued to, OR
. Received by, AND
. Capital nature, AND
. Resident vs Non-resident

Question 7

What is a secondary source of information when determining gross income?

Answer 7

Case law.