M/C Tax Chapters 1-5
X. Ltd. is a corporation which has always been managed by the same board of directors. The board of
directors has always met where the directors reside. Based on these facts, X Ltd. will NOT be resident in
Canada for income tax purposes if X Ltd. was:
A) Incorporated in Canada in 1968 and it's directors are all U.S residents
B) Incorporated in the U.S in 1970 and its directors are all U.S residents
C) Incorporated in the U.S in 1968and its directors are all Canadian residents
D) Incorporated in Canada in 1964 and its directors are all Canadian residents - ✔✔ correct answer B)
Incorporated in the U.S in 1970 and its directors are all U.S residents
Joe is legally separated from his wife and has two adult children who live with his wife and are not
dependent on him for support. Joe is leaving Canada to take a job in Germany on June 30 of this year. He
plans to stay in Germany indefinitely and has purchased a home there. Which one of the following things
is the most important for Joe to do to help ensure that he is not a resident of Canada for Canadian
income tax purposes after he leaves?
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
D) Put all his household furniture and personal effects into storage in Canada - ✔✔ correct answer C) Sell
his Canadian home or rent it under a long-term lease
*Generally the CRA will consider the individual not to have severed residential ties within Canada if he
has a dwelling available for occupancy*
, M/C Tax Chapters 1-5
Mr. Ng is not a resident of Canada. In the year, he had worldwide income of 200,000, including 50,000 of
employment income earned in Canada (from directors fees) and 10,000 of interest on Government of
Canada bonds
What amount of taxable income must Mr. Ng report on his Canadian personal income tax return for the
year?
A) $10,000
B) $50,000
C) $60,000
D) $200,000 - ✔✔ correct answer B) $50,000
*Note: the $10,000 in interest is not taxable under either Part 1 or Part XIII "Fully exempt interest*
Jay ceased to be a resident of Canada on April 30 of the year and moved to New Zealand on that date.
During the first four months of the year, he earned $25,000 of employment income in Canada and
$1,000 of interest income from his bank accounts in Canada. While living in New Zealand during the
remainder of the year, he earned $30,000 (CDN$) of employment income in New Zealand and received
$2,000 of interest income from his Canadian bank accounts.
What amount of taxable income must Jay report on his Canadian personal income tax return for the
year?
A) $58,000
B) $56,000
C) $26,000
D) Nil - ✔✔ correct answer C) $26,000
X. Ltd. is a corporation which has always been managed by the same board of directors. The board of
directors has always met where the directors reside. Based on these facts, X Ltd. will NOT be resident in
Canada for income tax purposes if X Ltd. was:
A) Incorporated in Canada in 1968 and it's directors are all U.S residents
B) Incorporated in the U.S in 1970 and its directors are all U.S residents
C) Incorporated in the U.S in 1968and its directors are all Canadian residents
D) Incorporated in Canada in 1964 and its directors are all Canadian residents - ✔✔ correct answer B)
Incorporated in the U.S in 1970 and its directors are all U.S residents
Joe is legally separated from his wife and has two adult children who live with his wife and are not
dependent on him for support. Joe is leaving Canada to take a job in Germany on June 30 of this year. He
plans to stay in Germany indefinitely and has purchased a home there. Which one of the following things
is the most important for Joe to do to help ensure that he is not a resident of Canada for Canadian
income tax purposes after he leaves?
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
D) Put all his household furniture and personal effects into storage in Canada - ✔✔ correct answer C) Sell
his Canadian home or rent it under a long-term lease
*Generally the CRA will consider the individual not to have severed residential ties within Canada if he
has a dwelling available for occupancy*
, M/C Tax Chapters 1-5
Mr. Ng is not a resident of Canada. In the year, he had worldwide income of 200,000, including 50,000 of
employment income earned in Canada (from directors fees) and 10,000 of interest on Government of
Canada bonds
What amount of taxable income must Mr. Ng report on his Canadian personal income tax return for the
year?
A) $10,000
B) $50,000
C) $60,000
D) $200,000 - ✔✔ correct answer B) $50,000
*Note: the $10,000 in interest is not taxable under either Part 1 or Part XIII "Fully exempt interest*
Jay ceased to be a resident of Canada on April 30 of the year and moved to New Zealand on that date.
During the first four months of the year, he earned $25,000 of employment income in Canada and
$1,000 of interest income from his bank accounts in Canada. While living in New Zealand during the
remainder of the year, he earned $30,000 (CDN$) of employment income in New Zealand and received
$2,000 of interest income from his Canadian bank accounts.
What amount of taxable income must Jay report on his Canadian personal income tax return for the
year?
A) $58,000
B) $56,000
C) $26,000
D) Nil - ✔✔ correct answer C) $26,000
