ACCT 240 - Chapter 1 Canadian Income
Tax
What is the CRA - ✔✔ correct answer Canada Revenue Agency: is a federal government agency that is
tasked with the responsibility of administering the Income Tax Act (ITA). It does NOT establish tax
policies. The department of Finance analyses and designs tax policies.
Administering the ITA involves: (5) - ✔✔ correct answer 1) Interpreting the spirit of the ITA and
developing processes to ensure the spirit is followed by taxpayers of Canada
2)Creating, upholding and collecting forms for reporting income by various taxpayers (individuals, corps,
trusts)
3) Assess taxation based on the provisions of the ITA and administer an appeal process for taxpayers who
dispute assessment of taxation
4) Collection of income and other taxes
5) Enforcement of authority to impose fines and penalties for non-compliance of the provisions of the
ITA
Who is Liable for Income tax? - ✔✔ correct answer -IT is payable by every person resident in canada at
any time of the year. Residents are taxed on their world income
-Non-residents must pay tax on their Canadian sourced income
Types of Canadian Sourced Income (3 examples) - ✔✔ correct answer -Canadian employment income
-Canadian business income
-Income from the disposal of Canadian property
A person includes... - ✔✔ correct answer -An individual
-A corporation
-Trusts
, ACCT 240 - Chapter 1 Canadian Income
Tax
--> NOT proprietorships or partnerships
Residency is defined in the ITA: True or False - ✔✔ correct answer False, residency is not defined in the
ITA. The courts have had to determine residency for tax purposes.
The courts have established that an individual is resident of the country where he/she regularly lives.
Factual resident - ✔✔ correct answer The CRA uses this term which means that, although a person left
Canada, they are still considered to be a resident of Canada for Income tax purposes.
-taxation is one worldwide income
-residency is NOT citizenship
-residency is reassessed annually
-"continuing state of relationship" with Canada
Residence of an individual: types of ties that are must be considered in determining whether an
individual is a resident or non-resident: (2) - ✔✔ correct answer 1) Significant residential ties to Canada
2)Secondary residential ties to Canada
Significant Primary residential ties to Canada Include: - ✔✔ correct answer 1) a home in Canada -
Dwelling
2) a spouse or common law partner in Canada
3) dependants in Canada
Strong evidence that an ongoing relationship exists
Secondary residential ties that may be relevant include: - ✔✔ correct answer 1) personal property in
canada (car, boat, furniture)
2)social ties in canada (memberships, religious org)
Tax
What is the CRA - ✔✔ correct answer Canada Revenue Agency: is a federal government agency that is
tasked with the responsibility of administering the Income Tax Act (ITA). It does NOT establish tax
policies. The department of Finance analyses and designs tax policies.
Administering the ITA involves: (5) - ✔✔ correct answer 1) Interpreting the spirit of the ITA and
developing processes to ensure the spirit is followed by taxpayers of Canada
2)Creating, upholding and collecting forms for reporting income by various taxpayers (individuals, corps,
trusts)
3) Assess taxation based on the provisions of the ITA and administer an appeal process for taxpayers who
dispute assessment of taxation
4) Collection of income and other taxes
5) Enforcement of authority to impose fines and penalties for non-compliance of the provisions of the
ITA
Who is Liable for Income tax? - ✔✔ correct answer -IT is payable by every person resident in canada at
any time of the year. Residents are taxed on their world income
-Non-residents must pay tax on their Canadian sourced income
Types of Canadian Sourced Income (3 examples) - ✔✔ correct answer -Canadian employment income
-Canadian business income
-Income from the disposal of Canadian property
A person includes... - ✔✔ correct answer -An individual
-A corporation
-Trusts
, ACCT 240 - Chapter 1 Canadian Income
Tax
--> NOT proprietorships or partnerships
Residency is defined in the ITA: True or False - ✔✔ correct answer False, residency is not defined in the
ITA. The courts have had to determine residency for tax purposes.
The courts have established that an individual is resident of the country where he/she regularly lives.
Factual resident - ✔✔ correct answer The CRA uses this term which means that, although a person left
Canada, they are still considered to be a resident of Canada for Income tax purposes.
-taxation is one worldwide income
-residency is NOT citizenship
-residency is reassessed annually
-"continuing state of relationship" with Canada
Residence of an individual: types of ties that are must be considered in determining whether an
individual is a resident or non-resident: (2) - ✔✔ correct answer 1) Significant residential ties to Canada
2)Secondary residential ties to Canada
Significant Primary residential ties to Canada Include: - ✔✔ correct answer 1) a home in Canada -
Dwelling
2) a spouse or common law partner in Canada
3) dependants in Canada
Strong evidence that an ongoing relationship exists
Secondary residential ties that may be relevant include: - ✔✔ correct answer 1) personal property in
canada (car, boat, furniture)
2)social ties in canada (memberships, religious org)
