Test Bank Solution For Introduction to
Federal Income Taxation in Canada, 45th
Edition by Nathalie Johnstone Latest Version
2025/2026 [A+] Questions & Answers
Perfectly Verified for 100% Success
,This Comprehensive Structure Covers Various Aspects Of Federal
Income Taxation In Canada, Providing Readers With A Detailed
Understanding Of The Subject.
TOPIC 1: INTRODUCTION (QUESTIONS 1–20)
1. Which Of The Following Sources Holds The Highest Legal Authority For Canadian Federal Income
Tax?
A. Canada Revenue Agency (CRA) Interpretation Bulletins
B. Income Tax Act (ITA)
C. CRA Information Circulars
D. Income Tax Folios
Answer; B
Explanation: The Income Tax Act (ITA) Passed By Parliament Is The Primary Authority For Federal Income
Tax Law In Canada. CRA Documents (Interpretation Bulletins, Folios, Etc.) Provide Administrative
Guidance But Do Not Override The Legislation.
2. The Canadian Federal Income Tax System Is Based On Which Of The Following?
A. A Purely Regressive Tax System
B. A Consumption-Based Tax System
C. A Progressive Tax Rate Structure
D. A Uniform Single Tax Rate
Answer; C
,Explanation: Canada Uses A Progressive Tax Rate Structure, Meaning The Rate Of Taxation Increases As
The Taxable Income Increases.
3. Which Administrative Body Is Primarily Responsible For The Administration And Enforcement Of
The Federal Income Tax Act?
A. Department Of Finance
B. Canadian Tax Foundation
C. Supreme Court Of Canada
D. Canada Revenue Agency (CRA)
Answer; D
Explanation: The CRA Administers And Enforces Federal Tax Laws, Including The Income Tax Act, Collects
Taxes, And Delivers Benefit Programs.
4. Which Of The Following Courts Generally Hears Initial Tax Disputes Between Taxpayers And The
CRA?
A. Tax Court Of Canada
B. Federal Court Of Canada
C. Supreme Court Of Canada
D. Provincial Superior Courts
Answer; A
Explanation: The Tax Court Of Canada Is A Specialized Court That Hears Income Tax, Goods And Services
Tax (GST/HST), And Other Tax-Related Disputes.
5. If A Taxpayer Disagrees With An Assessment From The CRA, What Is The First Step In Disputing
It?
, A. Filing A Notice Of Appeal Directly To The Tax Court Of Canada
B. Submitting An Objection To The CRA’s Appeals Division
C. Appealing To The Federal Court Of Appeal
D. Requesting Relief From The Supreme Court Of Canada
Answer; B
Explanation: The First Step After Receiving A Notice Of Assessment Or Reassessment Is To File A Notice
Of Objection With The CRA’s Appeals Division.
6. Which Of The Following Best Describes The Principle Of “Self-Assessment” In The Canadian Tax
System?
A. Taxpayers Calculate Their Own Tax Liability And File Returns Accordingly.
B. CRA Calculates The Taxpayer’s Tax Liability And Sends A Bill.
C. Tax Is Only Paid If The Taxpayer Decides It Is Necessary.
D. Income Is Taxed Only After A Formal Audit Has Been Completed.
Answer; A
Explanation: Canada’s Self-Assessment System Relies On Taxpayers To Report Their Income And
Calculate Their Taxes Accurately, Subject To CRA Review.
7. Which Of The Following Statements About The Income Tax Act Is True?
A. It Only Applies To Corporations.
B. It Is Updated Once Every Decade.
C. It Applies To Individuals And Corporations.
D. It Never Undergoes Amendments.
Answer; C
Federal Income Taxation in Canada, 45th
Edition by Nathalie Johnstone Latest Version
2025/2026 [A+] Questions & Answers
Perfectly Verified for 100% Success
,This Comprehensive Structure Covers Various Aspects Of Federal
Income Taxation In Canada, Providing Readers With A Detailed
Understanding Of The Subject.
TOPIC 1: INTRODUCTION (QUESTIONS 1–20)
1. Which Of The Following Sources Holds The Highest Legal Authority For Canadian Federal Income
Tax?
A. Canada Revenue Agency (CRA) Interpretation Bulletins
B. Income Tax Act (ITA)
C. CRA Information Circulars
D. Income Tax Folios
Answer; B
Explanation: The Income Tax Act (ITA) Passed By Parliament Is The Primary Authority For Federal Income
Tax Law In Canada. CRA Documents (Interpretation Bulletins, Folios, Etc.) Provide Administrative
Guidance But Do Not Override The Legislation.
2. The Canadian Federal Income Tax System Is Based On Which Of The Following?
A. A Purely Regressive Tax System
B. A Consumption-Based Tax System
C. A Progressive Tax Rate Structure
D. A Uniform Single Tax Rate
Answer; C
,Explanation: Canada Uses A Progressive Tax Rate Structure, Meaning The Rate Of Taxation Increases As
The Taxable Income Increases.
3. Which Administrative Body Is Primarily Responsible For The Administration And Enforcement Of
The Federal Income Tax Act?
A. Department Of Finance
B. Canadian Tax Foundation
C. Supreme Court Of Canada
D. Canada Revenue Agency (CRA)
Answer; D
Explanation: The CRA Administers And Enforces Federal Tax Laws, Including The Income Tax Act, Collects
Taxes, And Delivers Benefit Programs.
4. Which Of The Following Courts Generally Hears Initial Tax Disputes Between Taxpayers And The
CRA?
A. Tax Court Of Canada
B. Federal Court Of Canada
C. Supreme Court Of Canada
D. Provincial Superior Courts
Answer; A
Explanation: The Tax Court Of Canada Is A Specialized Court That Hears Income Tax, Goods And Services
Tax (GST/HST), And Other Tax-Related Disputes.
5. If A Taxpayer Disagrees With An Assessment From The CRA, What Is The First Step In Disputing
It?
, A. Filing A Notice Of Appeal Directly To The Tax Court Of Canada
B. Submitting An Objection To The CRA’s Appeals Division
C. Appealing To The Federal Court Of Appeal
D. Requesting Relief From The Supreme Court Of Canada
Answer; B
Explanation: The First Step After Receiving A Notice Of Assessment Or Reassessment Is To File A Notice
Of Objection With The CRA’s Appeals Division.
6. Which Of The Following Best Describes The Principle Of “Self-Assessment” In The Canadian Tax
System?
A. Taxpayers Calculate Their Own Tax Liability And File Returns Accordingly.
B. CRA Calculates The Taxpayer’s Tax Liability And Sends A Bill.
C. Tax Is Only Paid If The Taxpayer Decides It Is Necessary.
D. Income Is Taxed Only After A Formal Audit Has Been Completed.
Answer; A
Explanation: Canada’s Self-Assessment System Relies On Taxpayers To Report Their Income And
Calculate Their Taxes Accurately, Subject To CRA Review.
7. Which Of The Following Statements About The Income Tax Act Is True?
A. It Only Applies To Corporations.
B. It Is Updated Once Every Decade.
C. It Applies To Individuals And Corporations.
D. It Never Undergoes Amendments.
Answer; C
