Test Bank for Introduction to Federal
Income Taxation in Canada (2025
2026) 46th Edition by Julie Robson,
Devan Mescall, Nathalie Johnstone,
TU
David Lin (All Chapters 1-22, 100%
Original Verified, A+ Grade)
TO
Test Bank Part 1: Practice MCQs with
Answers
R
Test Bank Part 2: Exam MCQs with
G
Answers
U
Test Bank Part 3: Exam Questions
R
with Solutions
U
, Table of Content
Chapter 1: Introduction
Chapter 2: Liability for Tax
Chapter 3: Employment Income
Chapter 4: Income From Business: General Concepts and Rules
Chapter 5: The Capital Cost Allowance System for Depreciable Property Including
Intangibles; Chapter 6: Income From Property
Chapter 7: Capital Gains
Chapter 8: Non-Arm's Length Transfers and Other Special Circumstances
TU
Chapter 9: Other Sources of Income and Deductions in Computing Income
Chapter 10: Computation of Taxable Income and Taxes Payable for Individuals
Chapter 11: Computation of Taxable Income and Tax After General Reductions for
Corporations Chapter 12: Integration for Business and Investment Income of the Private
Corporation
TO
Chapter 13: Shareholder-Manager Remuneration and Tax Planning for the Owner-Manager
Chapter 14: Rights and Obligations Under the Income Tax Act
Chapter 15: Purchase and Sale of a Business — Share Transactions
R
Chapter 16: Corporate Distributions, Asset Sales, and Winding Up
Chapter 17: Tax Deferred Transactions: Section 85, Section 86, Estate Freeze Transactions,
G
Amalgamations, and Wind-Ups
Chapter 18: The Sustainability Landscape and Tax
U
Chapter 19: Partnerships, Trusts, and Death of a Taxpayer
Chapter 20: International Taxation in Canada
R
Chapter 21: Goods and Services Tax (GST)/Harmonized Sales Tax (HST)
Chapter 22: Data Analytics and Information Systems in Tax, supporting instructors with
comprehensive assessment materials aligned to all course chapters for quizzes, exams, and
U
curriculum evaluation.
,Test Bank Part 1
These are practice MCQs that can be shared with the students should you desire to share some practice
questions.
Solution file for MCQs (correct answer is highlighted in yellow)
Chapter 2
Question 1
(A) incorporated in Canada in 1968 and its directors are all U.S. residents;
(B) incorporated in the U.S. in 1970 and its directors are all U.S. residents;
TU
(C) incorporated in the U.S. in 1968 and its directors are all Canadian residents;
(D) incorporated in Canada in 1966 and itsdirectors are all Canadian residents.
Feedback:
(B) is correct. Since X Ltd. is not incorporated in Canada, it is not deemed to be resident in Canada. Since the directors
are not resident in Canada, X Ltd. is not resident in Canada under the commonlaw ‘‘central management and control’’ rule.
(A) is incorrect because X Ltd. is deemed to be resident.
TO
(C) is incorrect because X Ltd. is resident under the common law ‘‘central management and control’’ rule.
(D) is incorrect because X Ltd. is deemed to be resident; the common law ‘‘central management and control’’ rule
would also apply.
Question 2
(A) Take his wife and children with him to Germany.
(B) Give up his Canadian citizenship.
(C) Sell his Canadian home or rent it under a long-term lease.
R
(D) Put all his household furniture and personal effects into storage in Canada.
Feedback:
(C) is correct. Generally, the CRA will consider the individual not to have severed residential ties within Canada if he
G
has a dwelling available for occupancy.
(A) is incorrect, because taking his wife and children with him to Germany is not feasible, since the couple is legally
separated and the children are not dependent on him for support.
(B) is incorrect, because giving up Canadian citizenship has little relevance in determining residency.
U
(D) is incorrect. Although putting all his household furniture and personal effects into storage in Canada is a
residential tie, the tie is a weaker one than that cited in (C).
Question 3
R
(A) $20,000
(B) $70,000
(C) $90,000
(D) $250,000
U
Feedback:
(B) is correct. Only the $70,000 of employment income earned in Canada would be reported on Mr. Ng’s Canadian
personal income tax return for the year.
(A) is incorrect. The $20,000 interest, earned by the non-resident, is not taxable under either Part I (ssec. 2(3)) or Part
XIII (ssec. 212(3), ‘‘fully exempt interest’’).
(C) is incorrect for the same reason as (A).
(D) is incorrect, because only residents of Canada are subject to Canadian income tax on their worldwide income.
, Question 4
(A) $58,000
(B) $56,000
(C) $26,000
(D) $nil
Feedback:
(C) is correct. Because Jay ceased to be a resident of Canada on April 30 of the year, only his worldwide income during
the first four months of the year ($26,000 = $25,000 + $1,000) is subject to tax in Canada under Part I and would be
reported on his Canadian personal income tax return for the year.
(A) is incorrect as it includes income earned while not a resident of Canada: $58,000 = $25,000 + $1,000 + $30,000 +
$2,000. The $30,000 of employment income earned in New Zealand and the $2,000 of Canadian interest earned from
May 1 to December 31 of the year are not subject to Part I tax because Jay is not resident in Canada at that time. The
$2,000 of Canadian interest is exempt from withholding tax under Part XIII.
TU
(B) is incorrect as it includes the salary earned in New Zealand: $56,000 = $25,000 + $1,000 + $30,000. As in (A), above,
the $30,000 of employment income earned in New Zealand is not subject to tax in Canada.
(D) is incorrect since it excludes the worldwide income earned while Jay was a resident in Canada. As discussed in (A),
above, this would be reported on his Canadian personal income tax return for the year.
Question 5
(A) non-resident.
TO
(B) resident by virtue of common-law.
(C) deemed resident.
(D) part-time resident.
Feedback:
D is correct - Mr. A is ceasing residency on November 1st therefore we have a situation where the residency status is
changing in the year. Mr. A would be a resident for the January 1, to November 1 period and a non-resident in the
later part of the year. He would be a part-year resident in the current year.
R
A, B, and C are incorrect see the explanation above.
Question 6
(A) non-resident.
G
(B) resident by virtue of common law.
(C) deemed resident.
(D) part-time resident.
Feedback:
U
C is correct - Mrs. Bee leaves in Florence therefore would be a non-resident were it not for the sojourner rule. Since she
spent a significant amount of time in Canada during the year (more than 179 days), she would be a deemed resident
and would be taxed on her worldwide income.
A, B and D are incorrect see the explanation above
R
Question 7
(A) non-resident.
(B) resident by virtue of common law.
U
(C) deemed resident.
(D) part-time resident.
Income Taxation in Canada (2025
2026) 46th Edition by Julie Robson,
Devan Mescall, Nathalie Johnstone,
TU
David Lin (All Chapters 1-22, 100%
Original Verified, A+ Grade)
TO
Test Bank Part 1: Practice MCQs with
Answers
R
Test Bank Part 2: Exam MCQs with
G
Answers
U
Test Bank Part 3: Exam Questions
R
with Solutions
U
, Table of Content
Chapter 1: Introduction
Chapter 2: Liability for Tax
Chapter 3: Employment Income
Chapter 4: Income From Business: General Concepts and Rules
Chapter 5: The Capital Cost Allowance System for Depreciable Property Including
Intangibles; Chapter 6: Income From Property
Chapter 7: Capital Gains
Chapter 8: Non-Arm's Length Transfers and Other Special Circumstances
TU
Chapter 9: Other Sources of Income and Deductions in Computing Income
Chapter 10: Computation of Taxable Income and Taxes Payable for Individuals
Chapter 11: Computation of Taxable Income and Tax After General Reductions for
Corporations Chapter 12: Integration for Business and Investment Income of the Private
Corporation
TO
Chapter 13: Shareholder-Manager Remuneration and Tax Planning for the Owner-Manager
Chapter 14: Rights and Obligations Under the Income Tax Act
Chapter 15: Purchase and Sale of a Business — Share Transactions
R
Chapter 16: Corporate Distributions, Asset Sales, and Winding Up
Chapter 17: Tax Deferred Transactions: Section 85, Section 86, Estate Freeze Transactions,
G
Amalgamations, and Wind-Ups
Chapter 18: The Sustainability Landscape and Tax
U
Chapter 19: Partnerships, Trusts, and Death of a Taxpayer
Chapter 20: International Taxation in Canada
R
Chapter 21: Goods and Services Tax (GST)/Harmonized Sales Tax (HST)
Chapter 22: Data Analytics and Information Systems in Tax, supporting instructors with
comprehensive assessment materials aligned to all course chapters for quizzes, exams, and
U
curriculum evaluation.
,Test Bank Part 1
These are practice MCQs that can be shared with the students should you desire to share some practice
questions.
Solution file for MCQs (correct answer is highlighted in yellow)
Chapter 2
Question 1
(A) incorporated in Canada in 1968 and its directors are all U.S. residents;
(B) incorporated in the U.S. in 1970 and its directors are all U.S. residents;
TU
(C) incorporated in the U.S. in 1968 and its directors are all Canadian residents;
(D) incorporated in Canada in 1966 and itsdirectors are all Canadian residents.
Feedback:
(B) is correct. Since X Ltd. is not incorporated in Canada, it is not deemed to be resident in Canada. Since the directors
are not resident in Canada, X Ltd. is not resident in Canada under the commonlaw ‘‘central management and control’’ rule.
(A) is incorrect because X Ltd. is deemed to be resident.
TO
(C) is incorrect because X Ltd. is resident under the common law ‘‘central management and control’’ rule.
(D) is incorrect because X Ltd. is deemed to be resident; the common law ‘‘central management and control’’ rule
would also apply.
Question 2
(A) Take his wife and children with him to Germany.
(B) Give up his Canadian citizenship.
(C) Sell his Canadian home or rent it under a long-term lease.
R
(D) Put all his household furniture and personal effects into storage in Canada.
Feedback:
(C) is correct. Generally, the CRA will consider the individual not to have severed residential ties within Canada if he
G
has a dwelling available for occupancy.
(A) is incorrect, because taking his wife and children with him to Germany is not feasible, since the couple is legally
separated and the children are not dependent on him for support.
(B) is incorrect, because giving up Canadian citizenship has little relevance in determining residency.
U
(D) is incorrect. Although putting all his household furniture and personal effects into storage in Canada is a
residential tie, the tie is a weaker one than that cited in (C).
Question 3
R
(A) $20,000
(B) $70,000
(C) $90,000
(D) $250,000
U
Feedback:
(B) is correct. Only the $70,000 of employment income earned in Canada would be reported on Mr. Ng’s Canadian
personal income tax return for the year.
(A) is incorrect. The $20,000 interest, earned by the non-resident, is not taxable under either Part I (ssec. 2(3)) or Part
XIII (ssec. 212(3), ‘‘fully exempt interest’’).
(C) is incorrect for the same reason as (A).
(D) is incorrect, because only residents of Canada are subject to Canadian income tax on their worldwide income.
, Question 4
(A) $58,000
(B) $56,000
(C) $26,000
(D) $nil
Feedback:
(C) is correct. Because Jay ceased to be a resident of Canada on April 30 of the year, only his worldwide income during
the first four months of the year ($26,000 = $25,000 + $1,000) is subject to tax in Canada under Part I and would be
reported on his Canadian personal income tax return for the year.
(A) is incorrect as it includes income earned while not a resident of Canada: $58,000 = $25,000 + $1,000 + $30,000 +
$2,000. The $30,000 of employment income earned in New Zealand and the $2,000 of Canadian interest earned from
May 1 to December 31 of the year are not subject to Part I tax because Jay is not resident in Canada at that time. The
$2,000 of Canadian interest is exempt from withholding tax under Part XIII.
TU
(B) is incorrect as it includes the salary earned in New Zealand: $56,000 = $25,000 + $1,000 + $30,000. As in (A), above,
the $30,000 of employment income earned in New Zealand is not subject to tax in Canada.
(D) is incorrect since it excludes the worldwide income earned while Jay was a resident in Canada. As discussed in (A),
above, this would be reported on his Canadian personal income tax return for the year.
Question 5
(A) non-resident.
TO
(B) resident by virtue of common-law.
(C) deemed resident.
(D) part-time resident.
Feedback:
D is correct - Mr. A is ceasing residency on November 1st therefore we have a situation where the residency status is
changing in the year. Mr. A would be a resident for the January 1, to November 1 period and a non-resident in the
later part of the year. He would be a part-year resident in the current year.
R
A, B, and C are incorrect see the explanation above.
Question 6
(A) non-resident.
G
(B) resident by virtue of common law.
(C) deemed resident.
(D) part-time resident.
Feedback:
U
C is correct - Mrs. Bee leaves in Florence therefore would be a non-resident were it not for the sojourner rule. Since she
spent a significant amount of time in Canada during the year (more than 179 days), she would be a deemed resident
and would be taxed on her worldwide income.
A, B and D are incorrect see the explanation above
R
Question 7
(A) non-resident.
(B) resident by virtue of common law.
U
(C) deemed resident.
(D) part-time resident.
