CHAPTER 1 - INTRODUCTION TO ee ee ee ee
FEDERAL TAX IN CANADA EXAM
ee ee ee ee ee
QUESTIONS WITH CORRECT ANSWERS ee ee ee
What eedoesJtheeegov't eeuseeetaxeerevenue eefor? ee-eecorrecteeanswer-- eeFor eeinitiatives eeofeetheeegov't
Breakdowneeofeetheeegov't eerevenuesJby eesource ee-eecorrect eeanswer-Personal eeIncome eeTaxJ-J50.1%
Corporate eeIncome eeTax ee- ee14.4%
ee
GST ee-ee11.4%
OthereeSourcesJ-ee11.4%
EI eepremiums ee- ee6.7%
ee
OthereeexciseJtaxesee-ee1.8%
Non-resident eeincome eetax ee- ee2.8%
ee CustomeeandeeimportJdutiesJ- ee1.4%
why eeis eepersonal eeincomeJtax eeiseetheJgreatest eesource eeofeerevenue eeforeetheeegov't?ee- eecorrectJanswer--
If eeaeecorporationeehaseetooeehigh eeofeeaeerateeeofeetaxeeiteewon't eedo eebusiness eeineethe eecountry.eeAeeloweetaxeerateJactseeas
eean eeincen eetiveJfor eethe eebusiness
- eeTHINK: eeCorporations eehigher eeindividuals. eeIndividuals eepay eetax eeoneeearningsJ-
>Jtherefore eetheeetax eeresponsibility eeisJtransferred.
Waseedoes ee"individual" eemean eeineeIncome eetaxJandeeGST ee-eecorrect eeanswer-Humaneebeing
WhatJiseeaee"Person"ee(taxableeeentities) eeineeIncomeeeTaxee-eecorrect eeanswer-Individual,eeCorporation, eeTrust
WhatJiseeaee"Person"ee(taxableeeentities)eeineeGST/HSTee-Jcorrecteeanswer-
Individual, eeCorporation, eeTrust, eePartnership, eeEstates, eeCharities, eeSocieties, eeUnions, eeClubs, eeAssociations,
eeCommi eessions, eeetc.
-eeSomeeeofeetheeeentitieseethateeareeeresponsibleeeforeeGST/HST eeare eenoteeresponsibleeeforeeincomeeetax.
-
For eeexample: eePartnerships eedon't eepay eeincome eetaxeeaseeaeepartnership, eerathereethe eeindividual eepartners eepay
eetax eeas eein eedividuals
, Legal eeFormseeofeeaeeBusiness ee- eecorrecteeanswer-
soleeeproprietorship, eepartnership, eecorporation,eetrust ee(trust eehas ee3eeparties, eetrustee,eetrustor, eebeneficiary)
Taxationeeandeeeconomiceepolicies eealloweefor:ee-Jcorrecteeanswer--
*Resource eeallocation*: eethiseeincludes eenational eedefense, eeeducation, eehealth eecare
- *Distributioneeeffects*: eehigher eetaxeeforeehighereeincome;eelower eetaxeeforeelowereeincome
- *Stabilization eeeffects*:eepublic eespendingeeto eestimulateeethe eeeconomy
-> eeTHINK: eeGivingeepeople eemoney eeineetimesJof eetrouble eeso eethe eeeconomy eedoesn'tJcollapse
- *FiscaleeFederalism*: eetransfer eeto eeprovincial eeandeemunicipal eegovernments
Qualitative eeCharacteristicsJ-Jcorrect eeanswer-Thereeeiseeoften eea eetrade-
off eebetweeneeequity, eeneutrality, eeadequacy, eeflexibility, eesimplicity ee&eeease eeofeecompliance, eecertainty,
eebalance eebetw eeeen eesectors, eeinternational eecompetitiveness
BasiceeStructureeeofeetheeeIncome eeTaxeeActee-eecorrect eeanswer-
Thereeeareee19eePartseebrokeneedowneeinto eeDivisionsJandeeSubdivisions. eeThere ee281 eeSectionseeineethe eeIncome eeTax
eeAct.
Other eeIncome eetax eelegislation eeincludes ee- eecorrect eeanswer-Draft eelegislation
Income eeTax eeregulations
ee
TaxJTreaties
Drafteelegislationee-eecorrecteeanswer-
Proposedeeineethe eeannual eefederal eebudget, eebut eemust eethen eebe eepassed eeby eeParliament, eewhich eecan eetake
eeconsiderable eetime. eeCan eebe eea eeparticular eechallenge eein eean eeelection eeyear
Incomeeetaxeeregulationsee-eecorrect eeanswer-
gives eedetails eefor eetheeeadministration eeandeeenforcementeeof eethe eeIncome eeTax eeActeeas eewell eeas eeprescribed
eerates. eeDefin eees eerequirements eefor eevarious eeclassesJof eepersons.
TaxJTreaties ee- eecorrect eeanswer--
Agreements eewith eeother eecountries eethatJmay eeoverride eetheJIncome eeTaxJAct eeineeaneeattemptJtoJavoideedouble
eetaxati eeon eeand eetax eeevasion eeby eepersonsJthat eemay eebe eeconsidered eeresident eefor eemore eethan eeone
eejurisdiction.
FEDERAL TAX IN CANADA EXAM
ee ee ee ee ee
QUESTIONS WITH CORRECT ANSWERS ee ee ee
What eedoesJtheeegov't eeuseeetaxeerevenue eefor? ee-eecorrecteeanswer-- eeFor eeinitiatives eeofeetheeegov't
Breakdowneeofeetheeegov't eerevenuesJby eesource ee-eecorrect eeanswer-Personal eeIncome eeTaxJ-J50.1%
Corporate eeIncome eeTax ee- ee14.4%
ee
GST ee-ee11.4%
OthereeSourcesJ-ee11.4%
EI eepremiums ee- ee6.7%
ee
OthereeexciseJtaxesee-ee1.8%
Non-resident eeincome eetax ee- ee2.8%
ee CustomeeandeeimportJdutiesJ- ee1.4%
why eeis eepersonal eeincomeJtax eeiseetheJgreatest eesource eeofeerevenue eeforeetheeegov't?ee- eecorrectJanswer--
If eeaeecorporationeehaseetooeehigh eeofeeaeerateeeofeetaxeeiteewon't eedo eebusiness eeineethe eecountry.eeAeeloweetaxeerateJactseeas
eean eeincen eetiveJfor eethe eebusiness
- eeTHINK: eeCorporations eehigher eeindividuals. eeIndividuals eepay eetax eeoneeearningsJ-
>Jtherefore eetheeetax eeresponsibility eeisJtransferred.
Waseedoes ee"individual" eemean eeineeIncome eetaxJandeeGST ee-eecorrect eeanswer-Humaneebeing
WhatJiseeaee"Person"ee(taxableeeentities) eeineeIncomeeeTaxee-eecorrect eeanswer-Individual,eeCorporation, eeTrust
WhatJiseeaee"Person"ee(taxableeeentities)eeineeGST/HSTee-Jcorrecteeanswer-
Individual, eeCorporation, eeTrust, eePartnership, eeEstates, eeCharities, eeSocieties, eeUnions, eeClubs, eeAssociations,
eeCommi eessions, eeetc.
-eeSomeeeofeetheeeentitieseethateeareeeresponsibleeeforeeGST/HST eeare eenoteeresponsibleeeforeeincomeeetax.
-
For eeexample: eePartnerships eedon't eepay eeincome eetaxeeaseeaeepartnership, eerathereethe eeindividual eepartners eepay
eetax eeas eein eedividuals
, Legal eeFormseeofeeaeeBusiness ee- eecorrecteeanswer-
soleeeproprietorship, eepartnership, eecorporation,eetrust ee(trust eehas ee3eeparties, eetrustee,eetrustor, eebeneficiary)
Taxationeeandeeeconomiceepolicies eealloweefor:ee-Jcorrecteeanswer--
*Resource eeallocation*: eethiseeincludes eenational eedefense, eeeducation, eehealth eecare
- *Distributioneeeffects*: eehigher eetaxeeforeehighereeincome;eelower eetaxeeforeelowereeincome
- *Stabilization eeeffects*:eepublic eespendingeeto eestimulateeethe eeeconomy
-> eeTHINK: eeGivingeepeople eemoney eeineetimesJof eetrouble eeso eethe eeeconomy eedoesn'tJcollapse
- *FiscaleeFederalism*: eetransfer eeto eeprovincial eeandeemunicipal eegovernments
Qualitative eeCharacteristicsJ-Jcorrect eeanswer-Thereeeiseeoften eea eetrade-
off eebetweeneeequity, eeneutrality, eeadequacy, eeflexibility, eesimplicity ee&eeease eeofeecompliance, eecertainty,
eebalance eebetw eeeen eesectors, eeinternational eecompetitiveness
BasiceeStructureeeofeetheeeIncome eeTaxeeActee-eecorrect eeanswer-
Thereeeareee19eePartseebrokeneedowneeinto eeDivisionsJandeeSubdivisions. eeThere ee281 eeSectionseeineethe eeIncome eeTax
eeAct.
Other eeIncome eetax eelegislation eeincludes ee- eecorrect eeanswer-Draft eelegislation
Income eeTax eeregulations
ee
TaxJTreaties
Drafteelegislationee-eecorrecteeanswer-
Proposedeeineethe eeannual eefederal eebudget, eebut eemust eethen eebe eepassed eeby eeParliament, eewhich eecan eetake
eeconsiderable eetime. eeCan eebe eea eeparticular eechallenge eein eean eeelection eeyear
Incomeeetaxeeregulationsee-eecorrect eeanswer-
gives eedetails eefor eetheeeadministration eeandeeenforcementeeof eethe eeIncome eeTax eeActeeas eewell eeas eeprescribed
eerates. eeDefin eees eerequirements eefor eevarious eeclassesJof eepersons.
TaxJTreaties ee- eecorrect eeanswer--
Agreements eewith eeother eecountries eethatJmay eeoverride eetheJIncome eeTaxJAct eeineeaneeattemptJtoJavoideedouble
eetaxati eeon eeand eetax eeevasion eeby eepersonsJthat eemay eebe eeconsidered eeresident eefor eemore eethan eeone
eejurisdiction.
