TIF PROBLEM ONE - 2
Introduction - True Or False
1. A value added tax is a tax levied on the increase in value of a commodity or service that has been
created by the taxpayer’s stage of the production or distribution cycle.
True or False?
2. A partnership can be a taxable entity for income tax purposes.
True or False?
3. A partnership can be a taxable entity for GST purposes.
True or False?
4. In general, provincial income taxes are based on a specified percentage of federal tax payable.
True or False?
5. The federal government does not collect personal or corporate taxes for Ontario or Quebec.
True or False?
6. A sales tax is a regressive tax even when it is applied at a single rate on all transactions.
True or False?
7. A major advantage of progressive tax rates is that their use encourages economic growth.
True or False?
8. Tax expenditures are less costly to administer than direct funding programs.
True or False?
9. Part I of the Income Tax Act is the largest and most important part.
True or False?
10. The citation ITA 61(4)(b)(ii) would be read Paragraph 61, Subparagraph 4, Section b, Subsection
ii.
True or False?
11. An income tax is payable for each taxation year on the Taxable Income of every personresident in
Canada at any time in the year.
True or False?
,12. Any taxpayer can choose the calendar year as their taxation year.
True or False?
TIF PROBLEM ONE - 3
Introduction - Multiple Choice
New For 2016/2017
CanadianTaxSystem
1. Which of the following types of taxes is not currently in use by the federal government of
Canada?
A. Excise Taxes
B. Custom Duties
C. Head Tax
D. Transfer Tax
TaxPolicyConcepts
2. Which of the following statements with respect to Canadian tax policy is NOT correct?
A. The economic burden of a particular tax may not fall on the same group that has the legal
liability to pay the tax.
B. Extremely high rates of tax will always encourage individuals to work harder so that they will
have more after tax income.
C. The inability to harmonize the GST in some provinces has increased the complexity of tax
compliance.
D. A progressive tax system is unfair to individuals with incomes that fluctuate significantly from
year to year.
IncomeTaxReferenceMaterials
3. Which of the following statements with respect to tax reference materials is correct?
A. Income Tax Folios are a legislative source of guidance.
B. Income Tax Regulations are gradually being replaced by Income Tax Folios.
C. Interpretation Bulletins are gradually being replaced by Information Circulars.
D. The Income Tax Act is the most important source of information for dealing with matters related
to the federal income tax.
,LiabilityForTax
4. Of the following statements related to liability for Canadian income tax, which statement is NOT
correct?
A. As used in the Income Tax Act, the term person refers to individuals, trusts, and corporations.
B. Corporations must use the calendar year as their taxation year.
C. The Canadian Part I tax is assessed on residents of Canada.
D. The Canadian Part I tax is assessed Canadian
employment income earned by a non-resident.
AlternativeConceptsofIncome
5. Which of the following statements with respect to the relationship between accounting Net
Income and Net Income For Tax Purposes is NOT correct?
A. Both accounting Net Income and Net Income For Tax Purposes value many assets at their
historical cost.
B. Accounting Net Income requires that costs be matched with revenues.
C. Net Income For Tax Purposes requires that costs be matched with revenues.
D. Accounting Net Income is determined by applying Generally Accepted Accounting
Principles.
CalculationOfNetIncomeForTaxPurposes
6. With respect to the determination of Net Income For Tax Purposes, which of the following
statements is correct?
A. Property losses are deducted from business income before the deduction of RRSP contributions.
B. Allowable capital losses can be deducted to the extent of other positive sources of income.
C. If not used during the current period, all subdivision e deductions can be carried forward to
subsequent periods.
D. If a business loss exceeds all other positive sources of income, Net Income For Tax Purposes is
equal to nil.
NetIncometoTaxableIncome
7. Which of the following items would be deducted in converting Net Income For Tax Purposes to
Taxable Income?
A. A deduction for spousal support payments made during the year.
B. A deduction for the extra costs related to living in prescribed areas of the Canadian north.
C. Current year allowable capital losses in excess of current year taxable capital gains.
, D. Current year business losses in excess of other positive sources of income.
TaxPlanning
8. Which of the following items does not result in tax avoidance?
A. Use of the lifetime capital gains deduction.
B. Employer contributions to group disability plans.
C. Employer contributions to private health care plans.
D. Accelerated depreciation (CCA) on rental properties.
Retained From Previous Editions
CanadianTaxSystem
9. Which of the following is NOT a taxable entity for Canadian income tax purposes?
A. Darklyn Ltd., a Canadian resident corporation.
B. Ms. Sarah Bright, a Canadian resident.
C. Walters and Walters, a group of CPAs operating as a partnership.
D. The Martin family trust.
10. Which of the following could be required to file a GST return?
A. Chan’s Clothing Store (an unincorporated business)
B. The Chan Foundation (a registered charity)
C. Min Chan (an individual)
D. All of the above could be required to file a GST return.
11. Which of the following forms of taxation provides the largest component of federal government
taxation revenues?
A. Personal income tax
B. Corporate income tax
C. Goods and services tax
D. Employment insurance premiums
12. With respect to provincial income taxes, other than those assessed in Quebec, which ofthe
following statements is NOT correct?
A. Each province can apply different rates to as many brackets for individuals as it wishes.
B. The federal government collects the provincial income tax for individuals for every province
except Quebec.
Introduction - True Or False
1. A value added tax is a tax levied on the increase in value of a commodity or service that has been
created by the taxpayer’s stage of the production or distribution cycle.
True or False?
2. A partnership can be a taxable entity for income tax purposes.
True or False?
3. A partnership can be a taxable entity for GST purposes.
True or False?
4. In general, provincial income taxes are based on a specified percentage of federal tax payable.
True or False?
5. The federal government does not collect personal or corporate taxes for Ontario or Quebec.
True or False?
6. A sales tax is a regressive tax even when it is applied at a single rate on all transactions.
True or False?
7. A major advantage of progressive tax rates is that their use encourages economic growth.
True or False?
8. Tax expenditures are less costly to administer than direct funding programs.
True or False?
9. Part I of the Income Tax Act is the largest and most important part.
True or False?
10. The citation ITA 61(4)(b)(ii) would be read Paragraph 61, Subparagraph 4, Section b, Subsection
ii.
True or False?
11. An income tax is payable for each taxation year on the Taxable Income of every personresident in
Canada at any time in the year.
True or False?
,12. Any taxpayer can choose the calendar year as their taxation year.
True or False?
TIF PROBLEM ONE - 3
Introduction - Multiple Choice
New For 2016/2017
CanadianTaxSystem
1. Which of the following types of taxes is not currently in use by the federal government of
Canada?
A. Excise Taxes
B. Custom Duties
C. Head Tax
D. Transfer Tax
TaxPolicyConcepts
2. Which of the following statements with respect to Canadian tax policy is NOT correct?
A. The economic burden of a particular tax may not fall on the same group that has the legal
liability to pay the tax.
B. Extremely high rates of tax will always encourage individuals to work harder so that they will
have more after tax income.
C. The inability to harmonize the GST in some provinces has increased the complexity of tax
compliance.
D. A progressive tax system is unfair to individuals with incomes that fluctuate significantly from
year to year.
IncomeTaxReferenceMaterials
3. Which of the following statements with respect to tax reference materials is correct?
A. Income Tax Folios are a legislative source of guidance.
B. Income Tax Regulations are gradually being replaced by Income Tax Folios.
C. Interpretation Bulletins are gradually being replaced by Information Circulars.
D. The Income Tax Act is the most important source of information for dealing with matters related
to the federal income tax.
,LiabilityForTax
4. Of the following statements related to liability for Canadian income tax, which statement is NOT
correct?
A. As used in the Income Tax Act, the term person refers to individuals, trusts, and corporations.
B. Corporations must use the calendar year as their taxation year.
C. The Canadian Part I tax is assessed on residents of Canada.
D. The Canadian Part I tax is assessed Canadian
employment income earned by a non-resident.
AlternativeConceptsofIncome
5. Which of the following statements with respect to the relationship between accounting Net
Income and Net Income For Tax Purposes is NOT correct?
A. Both accounting Net Income and Net Income For Tax Purposes value many assets at their
historical cost.
B. Accounting Net Income requires that costs be matched with revenues.
C. Net Income For Tax Purposes requires that costs be matched with revenues.
D. Accounting Net Income is determined by applying Generally Accepted Accounting
Principles.
CalculationOfNetIncomeForTaxPurposes
6. With respect to the determination of Net Income For Tax Purposes, which of the following
statements is correct?
A. Property losses are deducted from business income before the deduction of RRSP contributions.
B. Allowable capital losses can be deducted to the extent of other positive sources of income.
C. If not used during the current period, all subdivision e deductions can be carried forward to
subsequent periods.
D. If a business loss exceeds all other positive sources of income, Net Income For Tax Purposes is
equal to nil.
NetIncometoTaxableIncome
7. Which of the following items would be deducted in converting Net Income For Tax Purposes to
Taxable Income?
A. A deduction for spousal support payments made during the year.
B. A deduction for the extra costs related to living in prescribed areas of the Canadian north.
C. Current year allowable capital losses in excess of current year taxable capital gains.
, D. Current year business losses in excess of other positive sources of income.
TaxPlanning
8. Which of the following items does not result in tax avoidance?
A. Use of the lifetime capital gains deduction.
B. Employer contributions to group disability plans.
C. Employer contributions to private health care plans.
D. Accelerated depreciation (CCA) on rental properties.
Retained From Previous Editions
CanadianTaxSystem
9. Which of the following is NOT a taxable entity for Canadian income tax purposes?
A. Darklyn Ltd., a Canadian resident corporation.
B. Ms. Sarah Bright, a Canadian resident.
C. Walters and Walters, a group of CPAs operating as a partnership.
D. The Martin family trust.
10. Which of the following could be required to file a GST return?
A. Chan’s Clothing Store (an unincorporated business)
B. The Chan Foundation (a registered charity)
C. Min Chan (an individual)
D. All of the above could be required to file a GST return.
11. Which of the following forms of taxation provides the largest component of federal government
taxation revenues?
A. Personal income tax
B. Corporate income tax
C. Goods and services tax
D. Employment insurance premiums
12. With respect to provincial income taxes, other than those assessed in Quebec, which ofthe
following statements is NOT correct?
A. Each province can apply different rates to as many brackets for individuals as it wishes.
B. The federal government collects the provincial income tax for individuals for every province
except Quebec.
