Test Bank for Introduction to Federal
Income Taxation in Canada (2025-
2026) 46th Edition By Julie Robson,
SC
Devan Mescall, Nathalie Johnstone,
David Lin (All Chapters 1-22, 100%
O
Original Verified, A+ Grade)
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Test Bank Part 1: Practice MCǪs with
Answers
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Test Bank Part 2: Exam MCǪs with
Answers
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Test Bank Part 3: Exam Ǫuestions
ID
with Solutions
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,Test Bank Part 1
These are practice MCQs that can be shared with the students should you desire to share some practice
questions.
Solution file for MCQs (correct answer is highlighted in yellow)
SC
Chapter 2
Question 1
(A) incorporated in Canada in 1968 and its 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 1968 and its directors are all Canadian residents;
(D) incorporated in Canada in 1966 and itsdirectors are all Canadian residents.
Feedback:
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(B) is correct. Since X Ltd. is not incorporated in Canada, it is not deemed to be resident in Canada. Since the directors
are not resident in Canada, X Ltd. is not resident in Canada under the commonlaw ‘‘central management and control’’ rule.
(A) is incorrect because X Ltd. is deemed to be resident.
(C) is incorrect because X Ltd. is resident under the common law ‘‘central management and control’’ rule.
(D) is incorrect because X Ltd. is deemed to be resident; the common law ‘‘central management and control’’ rule
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would also apply.
Question 2
(A) Take his wife and children with him to Germany.
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(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.
Feedback:
(C) is correct. Generally, the CRA will consider the individual not to have severed residential ties within Canada if he
has a dwelling available for occupancy.
(A) is incorrect, because taking his wife and children with him to Germany is not feasible, since the couple is legally
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separated and the children are not dependent on him for support.
(B) is incorrect, because giving up Canadian citizenship has little relevance in determining residency.
(D) is incorrect. Although putting all his household furniture and personal effects into storage in Canada is a
residential tie, the tie is a weaker one than that cited in (C).
ID
Question 3
(A) $20,000
(B) $70,000
(C) $90,000
(D) $250,000
Feedback:
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(B) is correct. Only the $70,000 of employment income earned in Canada would be reported on Mr. Ng’s Canadian
personal income tax return for the year.
(A) is incorrect. The $20,000 interest, earned by the non-resident, is not taxable under either Part I (ssec. 2(3)) or Part
XIII (ssec. 212(3), ‘‘fully exempt interest’’).
(C) is incorrect for the same reason as (A).
(D) is incorrect, because only residents of Canada are subject to Canadian income tax on their worldwide income.
, Question 4
(A) $58,000
(B) $56,000
(C) $26,000
(D) $nil
Feedback:
(C) is correct. Because Jay ceased to be a resident of Canada on April 30 of the year, only his worldwide income during
the first four months of the year ($26,000 = $25,000 + $1,000) is subject to tax in Canada under Part I and would be
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reported on his Canadian personal income tax return for the year.
(A) is incorrect as it includes income earned while not a resident of Canada: $58,000 = $25,000 + $1,000 + $30,000 +
$2,000. The $30,000 of employment income earned in New Zealand and the $2,000 of Canadian interest earned from
May 1 to December 31 of the year are not subject to Part I tax because Jay is not resident in Canada at that time. The
$2,000 of Canadian interest is exempt from withholding tax under Part XIII.
(B) is incorrect as it includes the salary earned in New Zealand: $56,000 = $25,000 + $1,000 + $30,000. As in (A), above,
the $30,000 of employment income earned in New Zealand is not subject to tax in Canada.
(D) is incorrect since it excludes the worldwide income earned while Jay was a resident in Canada. As discussed in (A),
above, this would be reported on his Canadian personal income tax return for the year.
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Question 5
(A) non-resident.
(B) resident by virtue of common-law.
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(C) deemed resident.
(D) part-time resident.
Feedback:
D is correct - Mr. A is ceasing residency on November 1st therefore we have a situation where the residency status is
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changing in the year. Mr. A would be a resident for the January 1, to November 1 period and a non-resident in the
later part of the year. He would be a part-year resident in the current year.
A, B, and C are incorrect see the explanation above.
Question 6
(A) non-resident.
(B) resident by virtue of common law.
(C) deemed resident.
(D) part-time resident.
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Feedback:
C is correct - Mrs. Bee leaves in Florence therefore would be a non-resident were it not for the sojourner rule. Since she
spent a significant amount of time in Canada during the year (more than 179 days), she would be a deemed resident
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and would be taxed on her worldwide income.
A, B and D are incorrect see the explanation above
Question 7
(A) non-resident.
(B) resident by virtue of common law.
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(C) deemed resident.
(D) part-time resident.
, Question 8
(A) his Canadian source employment income from May 28th to the end of the year.
(B) his Canadian source income from all sources from May 28th to the end of the year.
(C) his worldwide income from all sources from May 28th to the end of the year.
(D) his worldwide income from all sources for the entire year.
Question 9
(A) deemed resident by virtue of incorporation.
(B) deemed resident by virtue of common law.
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(C) part-time resident.
(D) non-resident.
Question 10
(A) deemed resident by virtue of incorporation.
(B) deemed resident by virtue of common law.
(C) part-time resident.
(D) non-resident.
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Question 11
(A) James Hill, a 25-year-old engineer living in Ottawa, accepted a six-month transfer to an office in London,
England for the period July 1 to December 31, of the year in question. He returned to Canada in the following year.
James is not married and has always lived at his parents’ house in Ottawa.
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(B) Judy Gordon, afinancial analyst, lives in a house she owns in London, England. She had lived in Toronto all
her life, until she started a minimum three-year contract with CS Services Inc., which started in July of the year in
question. Judy is single and terminated the lease on her apartment in Toronto before moving her belongings to
England when her position started in July.
(C) ERT Limited was incorporated in Canada in 1988 and, untilrecently, its manufacturing plant was located in
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Ontario. In June of the year in question, it moved all of its operations, including the manufacturing plant, to
Mexico.
(D) Doug Stewart, a member of the Canadian Armed Forces, has been stationed in Germany for the last 5 years,
including the year in question. Doug was born in Canada and lived in Canada prior to moving to Germany.
Feedback:
(B) is correct. Judy is a non-resident. She seems to have severed her residential ties to Canada (moving her
belongings) and established new ties to London, England (buying a house).
(A) is incorrect. James is still a resident of Canada. There is no indication that James has severed his residential ties
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to Canada or established ties to London, England.
(C) isincorrect.Since ERT Limitedwasincorporated in CanadaafterApril 26,1965,itisdeemed to be a resident of
Canada.
(D) isincorrect. Doug isdeemed to bearesident of Canada because heisamemberof the Canadian armed forces.
ID
ES
Income Taxation in Canada (2025-
2026) 46th Edition By Julie Robson,
SC
Devan Mescall, Nathalie Johnstone,
David Lin (All Chapters 1-22, 100%
O
Original Verified, A+ Grade)
R
Test Bank Part 1: Practice MCǪs with
Answers
EG
Test Bank Part 2: Exam MCǪs with
Answers
U
Test Bank Part 3: Exam Ǫuestions
ID
with Solutions
ES
,Test Bank Part 1
These are practice MCQs that can be shared with the students should you desire to share some practice
questions.
Solution file for MCQs (correct answer is highlighted in yellow)
SC
Chapter 2
Question 1
(A) incorporated in Canada in 1968 and its 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 1968 and its directors are all Canadian residents;
(D) incorporated in Canada in 1966 and itsdirectors are all Canadian residents.
Feedback:
O
(B) is correct. Since X Ltd. is not incorporated in Canada, it is not deemed to be resident in Canada. Since the directors
are not resident in Canada, X Ltd. is not resident in Canada under the commonlaw ‘‘central management and control’’ rule.
(A) is incorrect because X Ltd. is deemed to be resident.
(C) is incorrect because X Ltd. is resident under the common law ‘‘central management and control’’ rule.
(D) is incorrect because X Ltd. is deemed to be resident; the common law ‘‘central management and control’’ rule
R
would also apply.
Question 2
(A) Take his wife and children with him to Germany.
EG
(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.
Feedback:
(C) is correct. Generally, the CRA will consider the individual not to have severed residential ties within Canada if he
has a dwelling available for occupancy.
(A) is incorrect, because taking his wife and children with him to Germany is not feasible, since the couple is legally
U
separated and the children are not dependent on him for support.
(B) is incorrect, because giving up Canadian citizenship has little relevance in determining residency.
(D) is incorrect. Although putting all his household furniture and personal effects into storage in Canada is a
residential tie, the tie is a weaker one than that cited in (C).
ID
Question 3
(A) $20,000
(B) $70,000
(C) $90,000
(D) $250,000
Feedback:
ES
(B) is correct. Only the $70,000 of employment income earned in Canada would be reported on Mr. Ng’s Canadian
personal income tax return for the year.
(A) is incorrect. The $20,000 interest, earned by the non-resident, is not taxable under either Part I (ssec. 2(3)) or Part
XIII (ssec. 212(3), ‘‘fully exempt interest’’).
(C) is incorrect for the same reason as (A).
(D) is incorrect, because only residents of Canada are subject to Canadian income tax on their worldwide income.
, Question 4
(A) $58,000
(B) $56,000
(C) $26,000
(D) $nil
Feedback:
(C) is correct. Because Jay ceased to be a resident of Canada on April 30 of the year, only his worldwide income during
the first four months of the year ($26,000 = $25,000 + $1,000) is subject to tax in Canada under Part I and would be
SC
reported on his Canadian personal income tax return for the year.
(A) is incorrect as it includes income earned while not a resident of Canada: $58,000 = $25,000 + $1,000 + $30,000 +
$2,000. The $30,000 of employment income earned in New Zealand and the $2,000 of Canadian interest earned from
May 1 to December 31 of the year are not subject to Part I tax because Jay is not resident in Canada at that time. The
$2,000 of Canadian interest is exempt from withholding tax under Part XIII.
(B) is incorrect as it includes the salary earned in New Zealand: $56,000 = $25,000 + $1,000 + $30,000. As in (A), above,
the $30,000 of employment income earned in New Zealand is not subject to tax in Canada.
(D) is incorrect since it excludes the worldwide income earned while Jay was a resident in Canada. As discussed in (A),
above, this would be reported on his Canadian personal income tax return for the year.
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Question 5
(A) non-resident.
(B) resident by virtue of common-law.
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(C) deemed resident.
(D) part-time resident.
Feedback:
D is correct - Mr. A is ceasing residency on November 1st therefore we have a situation where the residency status is
EG
changing in the year. Mr. A would be a resident for the January 1, to November 1 period and a non-resident in the
later part of the year. He would be a part-year resident in the current year.
A, B, and C are incorrect see the explanation above.
Question 6
(A) non-resident.
(B) resident by virtue of common law.
(C) deemed resident.
(D) part-time resident.
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Feedback:
C is correct - Mrs. Bee leaves in Florence therefore would be a non-resident were it not for the sojourner rule. Since she
spent a significant amount of time in Canada during the year (more than 179 days), she would be a deemed resident
ID
and would be taxed on her worldwide income.
A, B and D are incorrect see the explanation above
Question 7
(A) non-resident.
(B) resident by virtue of common law.
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(C) deemed resident.
(D) part-time resident.
, Question 8
(A) his Canadian source employment income from May 28th to the end of the year.
(B) his Canadian source income from all sources from May 28th to the end of the year.
(C) his worldwide income from all sources from May 28th to the end of the year.
(D) his worldwide income from all sources for the entire year.
Question 9
(A) deemed resident by virtue of incorporation.
(B) deemed resident by virtue of common law.
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(C) part-time resident.
(D) non-resident.
Question 10
(A) deemed resident by virtue of incorporation.
(B) deemed resident by virtue of common law.
(C) part-time resident.
(D) non-resident.
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Question 11
(A) James Hill, a 25-year-old engineer living in Ottawa, accepted a six-month transfer to an office in London,
England for the period July 1 to December 31, of the year in question. He returned to Canada in the following year.
James is not married and has always lived at his parents’ house in Ottawa.
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(B) Judy Gordon, afinancial analyst, lives in a house she owns in London, England. She had lived in Toronto all
her life, until she started a minimum three-year contract with CS Services Inc., which started in July of the year in
question. Judy is single and terminated the lease on her apartment in Toronto before moving her belongings to
England when her position started in July.
(C) ERT Limited was incorporated in Canada in 1988 and, untilrecently, its manufacturing plant was located in
EG
Ontario. In June of the year in question, it moved all of its operations, including the manufacturing plant, to
Mexico.
(D) Doug Stewart, a member of the Canadian Armed Forces, has been stationed in Germany for the last 5 years,
including the year in question. Doug was born in Canada and lived in Canada prior to moving to Germany.
Feedback:
(B) is correct. Judy is a non-resident. She seems to have severed her residential ties to Canada (moving her
belongings) and established new ties to London, England (buying a house).
(A) is incorrect. James is still a resident of Canada. There is no indication that James has severed his residential ties
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to Canada or established ties to London, England.
(C) isincorrect.Since ERT Limitedwasincorporated in CanadaafterApril 26,1965,itisdeemed to be a resident of
Canada.
(D) isincorrect. Doug isdeemed to bearesident of Canada because heisamemberof the Canadian armed forces.
ID
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