CANADIAN INCOME TAX 2026 EXAM
QUESTIONS AND CORRECT ANSWERS A+
STUDY GUIDE COMPREHENSIVE
TAXATION PRACTICE TES
To be taxed in the year it was authorized, when does the remuneration
must be paid by? - CORRECT ANSWER-must be paid within 180 days
after the year end. if not, it is deducted when paid
What are the objectives of the Canadian Tax System? - CORRECT
ANSWER-1. Raise Revenue
2. Redistribute Income
3. Promote or penalize certain activities
4. Re-allocation of wealth among different layers of gov
What is a progressive tax system? - CORRECT ANSWER-As the individual
earns more income, higher tax rates are applied to higher level of income.
What are the issues that are encountered with a progressive tax system? -
CORRECT ANSWER-Complexity, Inequity, Economic growth (provide
disincentive when income is taxed at such a high rate), Tax evasion
Who is subject to tax in Canada? - CORRECT ANSWER-Individuals,
corporations and trusts
, NOTE: income is taxed in the hands of the person who are the partners of
proprietors
When an individual lives in the US and commutes to Canada for work every
day are they considered a resident of Canada? - CORRECT ANSWER-No,
they are not considered a resident of Canada. Even though they are in
Canada for more than 180 the sojourn rule does not apply.
difference between an allowance and a reimbursement - CORRECT
ANSWER-An allowance is a non-accountable advance provided to an
individual without regard for the actual use of the funds or amount of
expenses represented by it (usually a taxable benefit)
Reimbursement is an amount settled upon presentation of some form of
proof of expense
What Employee Insurances are considered taxable benefits? - CORRECT
ANSWER-- Life insurance
-Health care Insurance (premiums for provincial or federal funded heath
care are taxable if paid by employer) Private health care payments (dental
and extended medical) are not taxable benefits
Formula to define the taxable benefit of a loan to employee - CORRECT
ANSWER-Employee benefit= prescribed interest less interest paid by the
employee
QUESTIONS AND CORRECT ANSWERS A+
STUDY GUIDE COMPREHENSIVE
TAXATION PRACTICE TES
To be taxed in the year it was authorized, when does the remuneration
must be paid by? - CORRECT ANSWER-must be paid within 180 days
after the year end. if not, it is deducted when paid
What are the objectives of the Canadian Tax System? - CORRECT
ANSWER-1. Raise Revenue
2. Redistribute Income
3. Promote or penalize certain activities
4. Re-allocation of wealth among different layers of gov
What is a progressive tax system? - CORRECT ANSWER-As the individual
earns more income, higher tax rates are applied to higher level of income.
What are the issues that are encountered with a progressive tax system? -
CORRECT ANSWER-Complexity, Inequity, Economic growth (provide
disincentive when income is taxed at such a high rate), Tax evasion
Who is subject to tax in Canada? - CORRECT ANSWER-Individuals,
corporations and trusts
, NOTE: income is taxed in the hands of the person who are the partners of
proprietors
When an individual lives in the US and commutes to Canada for work every
day are they considered a resident of Canada? - CORRECT ANSWER-No,
they are not considered a resident of Canada. Even though they are in
Canada for more than 180 the sojourn rule does not apply.
difference between an allowance and a reimbursement - CORRECT
ANSWER-An allowance is a non-accountable advance provided to an
individual without regard for the actual use of the funds or amount of
expenses represented by it (usually a taxable benefit)
Reimbursement is an amount settled upon presentation of some form of
proof of expense
What Employee Insurances are considered taxable benefits? - CORRECT
ANSWER-- Life insurance
-Health care Insurance (premiums for provincial or federal funded heath
care are taxable if paid by employer) Private health care payments (dental
and extended medical) are not taxable benefits
Formula to define the taxable benefit of a loan to employee - CORRECT
ANSWER-Employee benefit= prescribed interest less interest paid by the
employee
