1. Award: gt
Which gtof gtthe gtfollowing gtis gtnot gtconsidered gtto gtbe gta gtseparate gtentity gtfor gttax gtpurposes gtin gtCanada?
gt An gtindividual
gt
gt A
gt proprietorship gt
g t A gtcorporation gt
g t A gttrust
A gtproprietorship gtis gtcorrect gtas gtthe gtentities gtsubject gtto gttax gton gtincome gtin gtCanada gtare gtindividuals, gtcorporations, gtand gttrusts.
2. Award: gt
Which gtof gtthe gtfollowing gtattitudes gtand gtactions gtis gtmost gtlikely gtto gthelp gtdecision-makers gtdevelop gtan gtefficient gtapproach gtto gttaxation?
g t Cash gtflows gtshould gtbe gtconsidered gtfrom gta gtbefore-tax gtperspective gtwhen gtmaking gtdecisions.
g t Functional gtmanagers gtshould gtnot gtbe gtheld gtresponsible gtfor gtthe gttax gteffects gtof gtdecisions gtwithin gttheir gtdivisions.
g t
gt Tax gtcosts gtto gta gtbusiness gtshould gtbe gtregarded gtas gtcontrollable gtexpenses, gtmuch gtlike gtproduct gtcosts gtand gtselling gtcosts.
g t All gtmanagers gtshould gtown gta gtcopy gtof gtthe gtIncome gtTax gtAct.
Taxation gtshould gtbe gtconsidered gtin gtall gtaspects gtof gtbusiness gtplanning gton gtan gtongoing gtbasis.
3. Award: gt
Which gtof gtthe gtfollowing gtstatements gtis gttrue?
g t Dividends gtpaid gtby gta gtcorporation gtare gtdeductible gtby gtthat gtcorporation gtand gtare gta gtform gtof gtproperty gtincome gtfor gtthe
gt recipient. gt g t Dividends gtpaid gtby gta gtcorporation gtare gtdeductible gtby gtthat gtcorporation gtand gtare gta gtform gtof gtbusiness
gt income gtfor gtthe gtrecipient.
g t Dividends gtpaid gtby gta gtcorporation gtare gtnot gtdeductible gtby gtthat gtcorporation gtand gtare gta gtform gtof gtbusiness gtincome gtfor gtthe
recipient. gt
gt
g t
g t Dividends gtpaid gtby gta gtcorporation gtare gtnot gtdeductible gtby gtthat gtcorporation gtand gtare gta gtform gtof gtproperty
gt income gtfor gtthe gtrecipient.
Dividends gtare gtpaid gtfrom gtafter-tax gtcorporate gtincome gtand gtare gtnot gta gtdeductible gtexpense. gtDividends gtreceived gtby gtindividuals gtare gta gtform gtof gtproperty
gtincome.
4. Award: gt
When gtassessing gtthe gtvalue gtof gta gtcorporation, gtthe gtmost gtrelevant gtinformation gtthat gtdecision-makers gtnormally gtconsider
is gt
gt gt the gtpotential gtfor gtbefore-tax gtprofits.
gt
g t the gtpotential gtfor gtafter-tax
gt profits. gt g t the gtcurrent gtcorporate
gt tax gtrate. gt gt cash gtflow gtbefore-
tax.
Decision-making gtshould gtalways gtaddress gtthe gtafter-tax gtvalues.
,5. Award: gt
Income gttax gtis gtcalculated gtfor gtwhich gtof gtthe gtfollowing gtjurisdictional gtgroups?
gt Municipal, gtprovincial, gtand
gt federal gt gt Municipal, gtfederal,
gt and gtforeign
gt
g t Provincial, gtfederal, gtand
gt foreign gt gt Municipal, gtprovincial,
gt and gtforeign
Canadian gttaxpayers gtare gtusually gtsubject gtto gtprovincial, gtfederal, gtand gtforeign gttax gton gtinternational gtincome.
6. Award: gt
Two gtinvestor gtcorporations gtmay gtnot gtenter gtjointly gtinto gtwhich gtof gtthe gtfollowing?
gt Joint
gt venture gt
g t Partnership
gt Separate gtcorporation
gt
g t
gt Proprietorship
A gtproprietorship, gtsince gtit gtis gtan gtoperation gtrun gtby gtone gtindividual.
7. Award: gt
Which gtof gtthe gtfollowing gtstatements gtis gttrue?
g t Cash gtflow gtshould gtnever gtbe gtcalculated gton gtan gtafter-tax gtbasis.
g t
g t The gttax gtcost gtto gta gtbusiness gtshould gtbe gtregarded gtas gta gtcost gtof gtdoing gtbusiness.
g t Income gttax gtcannot gtbe gttreated gtas gta gtcontrollable gtcost.
g t The gtvalue gtof gtan gtenterprise gtshould gtbe gtbased gton gtpre-tax gtcash gtflow.
Tax gtcosts gtare gta gtregular gtpart gtof gtdoing gtbusiness gtand gttherefore gthave gtan gtimpact gton gtcash gtflow.
8. Award: gt
Logan gtholds gta gt7% gtinterest-bearing gtdebt gtinstrument gtin gtGlow gtCo. gtGlow gtCo.'s gttax gtrate gtis gt27%, gtand gtLogan gtis gtin gta gt45% gttax gtbracket. gtWhich gtof gtthe gtfollowing
gtstatements gtis gtcorrect?
gt
gt The gtafter-tax gtcost gtof gtthe gtdebt gtinstrument gtis gt5.11% gtto gtGlow gtCo., gtand gtthe gtafter-tax gtvalue gtto gtLogan gtis
gt 3.85%. gt The gtafter-tax gtcost gtof gtthe gtdebt gtinstrument gtis gt5.11% gtto gtGlow gtCo., gtand gtthe gtafter-tax gtvalue gtto
gt
gt Logan gtis gt3.15%. gt The gtafter-tax gtcost gtof gtthe gtdebt gtinstrument gtis gt1.89% gtto gtGlow gtCo., gtand gtthe gtafter-tax
gt
gt value gtto gtLogan gtis gt3.15%. gt g t The gtafter-tax gtcost gtof gtthe gtdebt gtinstrument gtis gt7% gtto gtGlow gtCo., gtand
gt the gtafter-tax gtvalue gtto gtLogan gtis gt7%.
.07 gt× gt(1 gt- gt.27) gt= gt5.11%
.07 gt× gt(1 gt- gt.45) gt= gt3.85%.
,9. Award: gt
Which gtof gtthe gtfollowing gtlists gtaccurately gtnames gtthe gtfive gtgeneral gtincome gtcategories gtfor gttax gtpurposes?
g t Business, gtInterest, gtEmployment, gtCapital gtGains,
gt Other gt gt Business, gtProperty, gtEmployment, gtCapital
Gains, gtForeign
gt
g t
gt Business, gtProperty, gtEmployment, gtCapital gtGains,
Other gt
gt gt Business, gtProperty, gtEmployment,
Investments, gtOther
gt
Income gtfor gttax gtpurposes gtis gtcategorized gtas gtBusiness, gtProperty, gtEmployment, gtCapital gtGains, gtand gtOther.
10. Award: gt
Proprietorships, gtcorporations, gtpartnerships, gtlimited gtpartnerships, gtjoint gtventures, gtand gtincome gttrusts gtare
all gt
gt gt categories gtof gtincome gtfor gttax gtpurposes.
gt tax gtjurisdictions.
gt examples gtof gtfinancial gtinstruments.
gt
g t
gt forms gtof gtbusiness.
This gtlist gtcomprises gtthe gtmany gtforms gtof gtbusinesses gtthat gtmay gtbe gtcreated.
11. Award: gt
Which gtof gtthe gtfollowing gtstatements gtregarding gttaxation gtwithin gtjurisdictions gtin gtCanada gtis
gt true? gt g t Federal gtand gtprovincial gtor gtterritorial gttax gtbrackets gtare gtalways gtidentical gtto
one gtanother.
gt
g t Only gtfederal gttaxes gtapply gtto gtindividuals gtwhile gtboth gtfederal gtand gtprovincial gtor gtterritorial gttaxes gtapply gtto gtcorporations.
g t
g t Both gtfederal gtand gtprovincial gtor gtterritorial gttaxes gtapply gtto gtCanadian gttaxpayers.
g t Only gtfederal gttaxes gtapply gtto gtcorporations gtwhile gtboth gtfederal gtand gtprovincial gttaxes gtapply gtto gtindividuals.
Canadian gttaxpayers gtare gtsubject gtto gtboth gtfederal gtand gtprovincial gtor gtterritorial gttaxes, gtand gtthe gtschedule gtof gtrates gtfor gtthe gtlatter gtdiffers gtper gtjurisdiction.
12. Award: gt
Jamie gtis gtan gtemployee gtat gtABC gtLtd. gtand gtis gtin gta gt45% gttax gtbracket. gtABC gtLtd. gthas gta gttax gtrate gtof gt27%. gtThe gtcompany gthas gtoffered gtJamie gta gt10% gtpay gtraise.
gtJamie's gtcurrent gtsalary gtis gt$50,000. gtWhat gtis gtafter-tax gtcost gtof gtthe gtraise gtto gtABC gtLtd.?
gt$1,350
gt
gt $2,750 gt
g t $2,858
gt
gt $3,650
After-tax gtcost gtto gtABC gtLtd.: gt($50,000 gt× gt10%) gt× gt(1 gt- gt.27) gt= gt$3,650.
, 13. Award: gt
Simone gtis gtan gtemployee gtat gtXYZ gtLtd. gtand gtis gtin gta gt45% gttax gtbracket. gtXYZ gtLtd. gthas gta gttax gtrate gtof gt27%. gtThe gtcompany gthas gtoffered gtSimone gta gt10% gtpay
gtraise. gtSimone's gtcurrent gtsalary gtis gt$50,000. gtWhat gtis gtafter-tax gtvalue gtof gtthe gtraise gtto gtSimone?
g t $1,350 gt g t
gt $2,750 gt
gt $2,858
g t $3,650
After-tax gtvalue gtfor gtSimone: gt($50,000 gt× gt10%) gt× gt(1 gt- gt.45) gt= gt$2,750.
14. Award: gt
All gtcash gtflow gtmust gtbe gtconsidered gton gtan gtafter-tax gtbasis
because gt
gt gt companies gtwant gta gtpositive gtcash gtflow.
g t the gtvalue gtto gta gtbusiness gtmust gtbe
considered. gt
gt gt the gtinvestor's gttax gtrate gtis
gt irrelevant.
g t
gt decisions gtthat gtappear gtfavourable gton gta gtpre-tax gtbasis gtmay gtbe gtunfavorable gtor gtmarginally gtfavourable gton gtan gtafter- gttax gtbasis.
Taxes gtmust gtform gtpart gtof gtthe gtcash gtflow gtdecision.
15. Award: gt
Which gtof gtthe gtfollowing gtis gtnot gta gtseparate gtentity gtfor gttax gtpurposes?
gt Corporation
gt g t Trust
gt
gt Partnership
gt g t Individual
The gtindividual gtpartner gtis gttaxed gton gttheir gtshare gtof gtthe gtpartnership gtincome.
16. Award: gt
The gtCanadian gtincome gttax gtsystem gtis
considered gt
gt
gt
gt progressive.
gt regressive. gt
gt flat.
gt unfair.
The gtCanadian gtincome gttax gtsystem gtis gtconsidered gtprogressive gtbecause gtthe gtrate gtof gttax gton gtmarginal gtincome gtgets gtprogressively gthigher.
Which gtof gtthe gtfollowing gtis gtnot gtconsidered gtto gtbe gta gtseparate gtentity gtfor gttax gtpurposes gtin gtCanada?
gt An gtindividual
gt
gt A
gt proprietorship gt
g t A gtcorporation gt
g t A gttrust
A gtproprietorship gtis gtcorrect gtas gtthe gtentities gtsubject gtto gttax gton gtincome gtin gtCanada gtare gtindividuals, gtcorporations, gtand gttrusts.
2. Award: gt
Which gtof gtthe gtfollowing gtattitudes gtand gtactions gtis gtmost gtlikely gtto gthelp gtdecision-makers gtdevelop gtan gtefficient gtapproach gtto gttaxation?
g t Cash gtflows gtshould gtbe gtconsidered gtfrom gta gtbefore-tax gtperspective gtwhen gtmaking gtdecisions.
g t Functional gtmanagers gtshould gtnot gtbe gtheld gtresponsible gtfor gtthe gttax gteffects gtof gtdecisions gtwithin gttheir gtdivisions.
g t
gt Tax gtcosts gtto gta gtbusiness gtshould gtbe gtregarded gtas gtcontrollable gtexpenses, gtmuch gtlike gtproduct gtcosts gtand gtselling gtcosts.
g t All gtmanagers gtshould gtown gta gtcopy gtof gtthe gtIncome gtTax gtAct.
Taxation gtshould gtbe gtconsidered gtin gtall gtaspects gtof gtbusiness gtplanning gton gtan gtongoing gtbasis.
3. Award: gt
Which gtof gtthe gtfollowing gtstatements gtis gttrue?
g t Dividends gtpaid gtby gta gtcorporation gtare gtdeductible gtby gtthat gtcorporation gtand gtare gta gtform gtof gtproperty gtincome gtfor gtthe
gt recipient. gt g t Dividends gtpaid gtby gta gtcorporation gtare gtdeductible gtby gtthat gtcorporation gtand gtare gta gtform gtof gtbusiness
gt income gtfor gtthe gtrecipient.
g t Dividends gtpaid gtby gta gtcorporation gtare gtnot gtdeductible gtby gtthat gtcorporation gtand gtare gta gtform gtof gtbusiness gtincome gtfor gtthe
recipient. gt
gt
g t
g t Dividends gtpaid gtby gta gtcorporation gtare gtnot gtdeductible gtby gtthat gtcorporation gtand gtare gta gtform gtof gtproperty
gt income gtfor gtthe gtrecipient.
Dividends gtare gtpaid gtfrom gtafter-tax gtcorporate gtincome gtand gtare gtnot gta gtdeductible gtexpense. gtDividends gtreceived gtby gtindividuals gtare gta gtform gtof gtproperty
gtincome.
4. Award: gt
When gtassessing gtthe gtvalue gtof gta gtcorporation, gtthe gtmost gtrelevant gtinformation gtthat gtdecision-makers gtnormally gtconsider
is gt
gt gt the gtpotential gtfor gtbefore-tax gtprofits.
gt
g t the gtpotential gtfor gtafter-tax
gt profits. gt g t the gtcurrent gtcorporate
gt tax gtrate. gt gt cash gtflow gtbefore-
tax.
Decision-making gtshould gtalways gtaddress gtthe gtafter-tax gtvalues.
,5. Award: gt
Income gttax gtis gtcalculated gtfor gtwhich gtof gtthe gtfollowing gtjurisdictional gtgroups?
gt Municipal, gtprovincial, gtand
gt federal gt gt Municipal, gtfederal,
gt and gtforeign
gt
g t Provincial, gtfederal, gtand
gt foreign gt gt Municipal, gtprovincial,
gt and gtforeign
Canadian gttaxpayers gtare gtusually gtsubject gtto gtprovincial, gtfederal, gtand gtforeign gttax gton gtinternational gtincome.
6. Award: gt
Two gtinvestor gtcorporations gtmay gtnot gtenter gtjointly gtinto gtwhich gtof gtthe gtfollowing?
gt Joint
gt venture gt
g t Partnership
gt Separate gtcorporation
gt
g t
gt Proprietorship
A gtproprietorship, gtsince gtit gtis gtan gtoperation gtrun gtby gtone gtindividual.
7. Award: gt
Which gtof gtthe gtfollowing gtstatements gtis gttrue?
g t Cash gtflow gtshould gtnever gtbe gtcalculated gton gtan gtafter-tax gtbasis.
g t
g t The gttax gtcost gtto gta gtbusiness gtshould gtbe gtregarded gtas gta gtcost gtof gtdoing gtbusiness.
g t Income gttax gtcannot gtbe gttreated gtas gta gtcontrollable gtcost.
g t The gtvalue gtof gtan gtenterprise gtshould gtbe gtbased gton gtpre-tax gtcash gtflow.
Tax gtcosts gtare gta gtregular gtpart gtof gtdoing gtbusiness gtand gttherefore gthave gtan gtimpact gton gtcash gtflow.
8. Award: gt
Logan gtholds gta gt7% gtinterest-bearing gtdebt gtinstrument gtin gtGlow gtCo. gtGlow gtCo.'s gttax gtrate gtis gt27%, gtand gtLogan gtis gtin gta gt45% gttax gtbracket. gtWhich gtof gtthe gtfollowing
gtstatements gtis gtcorrect?
gt
gt The gtafter-tax gtcost gtof gtthe gtdebt gtinstrument gtis gt5.11% gtto gtGlow gtCo., gtand gtthe gtafter-tax gtvalue gtto gtLogan gtis
gt 3.85%. gt The gtafter-tax gtcost gtof gtthe gtdebt gtinstrument gtis gt5.11% gtto gtGlow gtCo., gtand gtthe gtafter-tax gtvalue gtto
gt
gt Logan gtis gt3.15%. gt The gtafter-tax gtcost gtof gtthe gtdebt gtinstrument gtis gt1.89% gtto gtGlow gtCo., gtand gtthe gtafter-tax
gt
gt value gtto gtLogan gtis gt3.15%. gt g t The gtafter-tax gtcost gtof gtthe gtdebt gtinstrument gtis gt7% gtto gtGlow gtCo., gtand
gt the gtafter-tax gtvalue gtto gtLogan gtis gt7%.
.07 gt× gt(1 gt- gt.27) gt= gt5.11%
.07 gt× gt(1 gt- gt.45) gt= gt3.85%.
,9. Award: gt
Which gtof gtthe gtfollowing gtlists gtaccurately gtnames gtthe gtfive gtgeneral gtincome gtcategories gtfor gttax gtpurposes?
g t Business, gtInterest, gtEmployment, gtCapital gtGains,
gt Other gt gt Business, gtProperty, gtEmployment, gtCapital
Gains, gtForeign
gt
g t
gt Business, gtProperty, gtEmployment, gtCapital gtGains,
Other gt
gt gt Business, gtProperty, gtEmployment,
Investments, gtOther
gt
Income gtfor gttax gtpurposes gtis gtcategorized gtas gtBusiness, gtProperty, gtEmployment, gtCapital gtGains, gtand gtOther.
10. Award: gt
Proprietorships, gtcorporations, gtpartnerships, gtlimited gtpartnerships, gtjoint gtventures, gtand gtincome gttrusts gtare
all gt
gt gt categories gtof gtincome gtfor gttax gtpurposes.
gt tax gtjurisdictions.
gt examples gtof gtfinancial gtinstruments.
gt
g t
gt forms gtof gtbusiness.
This gtlist gtcomprises gtthe gtmany gtforms gtof gtbusinesses gtthat gtmay gtbe gtcreated.
11. Award: gt
Which gtof gtthe gtfollowing gtstatements gtregarding gttaxation gtwithin gtjurisdictions gtin gtCanada gtis
gt true? gt g t Federal gtand gtprovincial gtor gtterritorial gttax gtbrackets gtare gtalways gtidentical gtto
one gtanother.
gt
g t Only gtfederal gttaxes gtapply gtto gtindividuals gtwhile gtboth gtfederal gtand gtprovincial gtor gtterritorial gttaxes gtapply gtto gtcorporations.
g t
g t Both gtfederal gtand gtprovincial gtor gtterritorial gttaxes gtapply gtto gtCanadian gttaxpayers.
g t Only gtfederal gttaxes gtapply gtto gtcorporations gtwhile gtboth gtfederal gtand gtprovincial gttaxes gtapply gtto gtindividuals.
Canadian gttaxpayers gtare gtsubject gtto gtboth gtfederal gtand gtprovincial gtor gtterritorial gttaxes, gtand gtthe gtschedule gtof gtrates gtfor gtthe gtlatter gtdiffers gtper gtjurisdiction.
12. Award: gt
Jamie gtis gtan gtemployee gtat gtABC gtLtd. gtand gtis gtin gta gt45% gttax gtbracket. gtABC gtLtd. gthas gta gttax gtrate gtof gt27%. gtThe gtcompany gthas gtoffered gtJamie gta gt10% gtpay gtraise.
gtJamie's gtcurrent gtsalary gtis gt$50,000. gtWhat gtis gtafter-tax gtcost gtof gtthe gtraise gtto gtABC gtLtd.?
gt$1,350
gt
gt $2,750 gt
g t $2,858
gt
gt $3,650
After-tax gtcost gtto gtABC gtLtd.: gt($50,000 gt× gt10%) gt× gt(1 gt- gt.27) gt= gt$3,650.
, 13. Award: gt
Simone gtis gtan gtemployee gtat gtXYZ gtLtd. gtand gtis gtin gta gt45% gttax gtbracket. gtXYZ gtLtd. gthas gta gttax gtrate gtof gt27%. gtThe gtcompany gthas gtoffered gtSimone gta gt10% gtpay
gtraise. gtSimone's gtcurrent gtsalary gtis gt$50,000. gtWhat gtis gtafter-tax gtvalue gtof gtthe gtraise gtto gtSimone?
g t $1,350 gt g t
gt $2,750 gt
gt $2,858
g t $3,650
After-tax gtvalue gtfor gtSimone: gt($50,000 gt× gt10%) gt× gt(1 gt- gt.45) gt= gt$2,750.
14. Award: gt
All gtcash gtflow gtmust gtbe gtconsidered gton gtan gtafter-tax gtbasis
because gt
gt gt companies gtwant gta gtpositive gtcash gtflow.
g t the gtvalue gtto gta gtbusiness gtmust gtbe
considered. gt
gt gt the gtinvestor's gttax gtrate gtis
gt irrelevant.
g t
gt decisions gtthat gtappear gtfavourable gton gta gtpre-tax gtbasis gtmay gtbe gtunfavorable gtor gtmarginally gtfavourable gton gtan gtafter- gttax gtbasis.
Taxes gtmust gtform gtpart gtof gtthe gtcash gtflow gtdecision.
15. Award: gt
Which gtof gtthe gtfollowing gtis gtnot gta gtseparate gtentity gtfor gttax gtpurposes?
gt Corporation
gt g t Trust
gt
gt Partnership
gt g t Individual
The gtindividual gtpartner gtis gttaxed gton gttheir gtshare gtof gtthe gtpartnership gtincome.
16. Award: gt
The gtCanadian gtincome gttax gtsystem gtis
considered gt
gt
gt
gt progressive.
gt regressive. gt
gt flat.
gt unfair.
The gtCanadian gtincome gttax gtsystem gtis gtconsidered gtprogressive gtbecause gtthe gtrate gtof gttax gton gtmarginal gtincome gtgets gtprogressively gthigher.
