Test Bank for Introduction to Federal Income Taxation in Canada 44th Edition (2023-2024) By Nathalie Johnstone, Devan Mescall, Jul
Robson
Test Bank for Introduction to Federal Income Taxation in Canada 44th Edition (2023-2024) By Nathalie Johnstone, Devan Mescall, Jul
Robson
,Test Bank for Introduction to Federal Income Taxation in Canada 44th Edition (2023-2024) By Nathalie Johnstone, Devan Mescall, Jul
Robson
Multiple Choice Exam Questions (Q1 to Q139)
Part 1
1) Tybee lives in Detroit, Michigan, USA. She commutes daily to Waterloo, Ontario,
Canada, where she is employed by Ford Motor Company of Canada Limited. She works 9
am to 5 pm, Monday through Friday. Which one of the following best indicates Tybee’s
residency status for Canadian income tax purposes for 2023?
(a) A full-time resident
(b) A part-year resident
(c) A non-resident
(d) A deemed resident (sojourner)
2) XYZ Inc. provides Samantha Davis with a company car. The car is leased for $800/month
(including 13% HST and excluding insurance) and was made available to her for
ten months. ABC pays all of the operating costs which amounted to $3,500 in 2023.
Samantha drove 13,000 kilometres in 2023 of which 8,000 were for business. What is the
minimum taxable benefit that Samantha must include on her 2023 personal tax return?
(a) $3,250 rounded
(b) $2,400 rounded
(c) $6,983rounded
(d) $8,000 rounded
3) Which of the following is a taxable benefit?
(a) A cash Christmas gift to an employee from the employer valued at $450.
(b) Payment of the tuition for an employee completing a degree that will benefit the
employer.
(c) A 20% discount on the employer’s merchandise, available to all employees.
(d) Subsidized meals offered to all employees of the company assuming the price is
approximately equal to the cost.
4) Hulk Protein Supplements Ltd. is a CCPC. Bruce Lily, one of the employees, was granted
a stock option on October 11, 2015 for 10,000 shares at $3 per share. Bruce exercised the
stock option on September 30, 2018 when the market price was $6 per share. In
February 2023, Bruce purchased a new home and sold the shares for $7 each. The fair
market value on October 11, 2015 was $4. What is the effect of the above on Bruce’s
income for tax purposes, assuming Bruce wants to minimize taxes?
(a) $15,000 in 2018
(b) $20,000 in 2023
(c) $30,000 in 2018
(d) $35,000 in 2023
Test Bank for Introduction to Federal Income Taxation in Canada 44th Edition (2023-2024) By Nathalie Johnstone, Devan Mescall, Jul
Robson
,Test Bank for Introduction to Federal Income Taxation in Canada 44th Edition (2023-2024) By Nathalie Johnstone, Devan Mescall, Jul
Robson
5) Cherizia Gold presents the following information with her 2023 tax return:
Capital Gains:
Shares $1,600
Personal-use property 850
Listed personal property 900
Capital losses:
Shares $ 850
Personal-use property 1,100
Listed personal property 300
Listed personal property losses of prior years 105
Net capital losses from 2020 310
What is the minimum taxable capital gain (rounded to the nearest dollar) to be reported
on Cherizia’s tax return?
(a) $1,048
(b) $623
(c) $675
(d) $1,675
6) River Rose, a sole proprietor, purchased an unlimited life franchise (arm’s length
transaction) at a cost of $100,000 during 2023. The maximum amount of capital cost
allowance that can be deducted in respect of the franchise for the taxation year ending
December 31, 2023 is:
(a) $2,500
(b) $3,750
(c) $7,500
(d) $8,475
7) On June 1, 2023, Beta Ltd, a CCPC, purchased a franchise for $115,000. The franchise
has a limited life of 13 years. Assuming that this is the only asset purchased by Beta in
the taxation year, which one of the following amounts represents the maximum amount
of capital cost allowance that Beta can deduct for its year ended July 31, 2023? Ignore
the leap year.
(a) $115,000
(b) $13,269
(c) $2,218
(d) $7,780
8) Lambda sold a capital property on October 31, 2023 for $200,000 with a cash down
payment of $15,000. The balance of $185,000 is payable on October 31, 2027. The
adjusted cost base of the property was $115,000 and the selling costs were $7,000. Which
one of the following amounts represents the minimum taxable capital gain (rounded to
the nearest dollar) in 2023?
(a) $39,000
(b) $5,850
(c) $7,800
(d) $15,600
Test Bank for Introduction to Federal Income Taxation in Canada 44th Edition (2023-2024) By Nathalie Johnstone, Devan Mescall, Jul
Robson
,Test Bank for Introduction to Federal Income Taxation in Canada 44th Edition (2023-2024) By Nathalie Johnstone, Devan Mescall, Jul
Robson
9) Scarpy Ltd. is a public company and a manufacturer with a December 31 year-end. On
January 1, 2023, the undepreciated capital cost for Class 10.1 was $17,850. The Class
10.1 car was purchased in 2021 for $35,000. During 2023, it was sold for $21,000. A new
automobile was purchased for $41,810, which included HST of $4,810. ABC Ltd. is
registered to collect and remit HST. What is the maximum CCA allowed combined
(rounded to the nearest dollar) for the two cars for 2023?
(a) $18,306
(b) $18,878
(c) $20,984
(d) $17,798
10) Jonas Laliberte is a self-employed therapist. He meets with all of his clients in his
400 square foot home office. The entire house has a square footage of 2,400 square feet.
Greg incurred the following costs:
Utilities $1,600
House insurance 700
Business liability insurance 500
House maintenance 1,000
Mortgage interest 3,700
Property tax 1,100
Office supplies 500
What are the total expenses deductible from business income?
(a) $1,000
(b) $1,350
(c) $1,517
(d) $2,350
11) K Corporation Inc., a public company, owns a restaurant business that it carries on in rented
premises. The lease was signed January 1, 2022 and expires on December 31, 2027 (six years
in total), and has two successive renewal options for two years each. K Corporation Inc. had
an opening balance in 2023 in Class 13 of $26,000 that resulted from $32,000 of leasehold
improvements made during the 2022 taxation year. K Corp Inc. made an additional $14,000
of leasehold improvements to the same premises during its 2023 taxation year-end which
ends December 31, 2023. What is the maximum CCA that K Corp. Inc. can claim in 2023 for
its Class 13 assets?
(a) $3,000
(b) $7,000
(c) $6,000
(d) $9,000
12) During the 12-month period ended December 31, 2022 ABC Co., a CCPC, purchased a
$40,000 (excluding tax of HST of 13%) passenger vehicle for use by its salesperson in
conducting his employment. What is the maximum capital cost allowance that ABC Co.
can claim for 2022, assuming that the company is a HST registrant (i.e., the company
remits HST)?
(a) $16,200
(b) $40,680
(c) $20,340
(d) $36,000
Test Bank for Introduction to Federal Income Taxation in Canada 44th Edition (2023-2024) By Nathalie Johnstone, Devan Mescall, Jul
Robson
Robson
Test Bank for Introduction to Federal Income Taxation in Canada 44th Edition (2023-2024) By Nathalie Johnstone, Devan Mescall, Jul
Robson
,Test Bank for Introduction to Federal Income Taxation in Canada 44th Edition (2023-2024) By Nathalie Johnstone, Devan Mescall, Jul
Robson
Multiple Choice Exam Questions (Q1 to Q139)
Part 1
1) Tybee lives in Detroit, Michigan, USA. She commutes daily to Waterloo, Ontario,
Canada, where she is employed by Ford Motor Company of Canada Limited. She works 9
am to 5 pm, Monday through Friday. Which one of the following best indicates Tybee’s
residency status for Canadian income tax purposes for 2023?
(a) A full-time resident
(b) A part-year resident
(c) A non-resident
(d) A deemed resident (sojourner)
2) XYZ Inc. provides Samantha Davis with a company car. The car is leased for $800/month
(including 13% HST and excluding insurance) and was made available to her for
ten months. ABC pays all of the operating costs which amounted to $3,500 in 2023.
Samantha drove 13,000 kilometres in 2023 of which 8,000 were for business. What is the
minimum taxable benefit that Samantha must include on her 2023 personal tax return?
(a) $3,250 rounded
(b) $2,400 rounded
(c) $6,983rounded
(d) $8,000 rounded
3) Which of the following is a taxable benefit?
(a) A cash Christmas gift to an employee from the employer valued at $450.
(b) Payment of the tuition for an employee completing a degree that will benefit the
employer.
(c) A 20% discount on the employer’s merchandise, available to all employees.
(d) Subsidized meals offered to all employees of the company assuming the price is
approximately equal to the cost.
4) Hulk Protein Supplements Ltd. is a CCPC. Bruce Lily, one of the employees, was granted
a stock option on October 11, 2015 for 10,000 shares at $3 per share. Bruce exercised the
stock option on September 30, 2018 when the market price was $6 per share. In
February 2023, Bruce purchased a new home and sold the shares for $7 each. The fair
market value on October 11, 2015 was $4. What is the effect of the above on Bruce’s
income for tax purposes, assuming Bruce wants to minimize taxes?
(a) $15,000 in 2018
(b) $20,000 in 2023
(c) $30,000 in 2018
(d) $35,000 in 2023
Test Bank for Introduction to Federal Income Taxation in Canada 44th Edition (2023-2024) By Nathalie Johnstone, Devan Mescall, Jul
Robson
,Test Bank for Introduction to Federal Income Taxation in Canada 44th Edition (2023-2024) By Nathalie Johnstone, Devan Mescall, Jul
Robson
5) Cherizia Gold presents the following information with her 2023 tax return:
Capital Gains:
Shares $1,600
Personal-use property 850
Listed personal property 900
Capital losses:
Shares $ 850
Personal-use property 1,100
Listed personal property 300
Listed personal property losses of prior years 105
Net capital losses from 2020 310
What is the minimum taxable capital gain (rounded to the nearest dollar) to be reported
on Cherizia’s tax return?
(a) $1,048
(b) $623
(c) $675
(d) $1,675
6) River Rose, a sole proprietor, purchased an unlimited life franchise (arm’s length
transaction) at a cost of $100,000 during 2023. The maximum amount of capital cost
allowance that can be deducted in respect of the franchise for the taxation year ending
December 31, 2023 is:
(a) $2,500
(b) $3,750
(c) $7,500
(d) $8,475
7) On June 1, 2023, Beta Ltd, a CCPC, purchased a franchise for $115,000. The franchise
has a limited life of 13 years. Assuming that this is the only asset purchased by Beta in
the taxation year, which one of the following amounts represents the maximum amount
of capital cost allowance that Beta can deduct for its year ended July 31, 2023? Ignore
the leap year.
(a) $115,000
(b) $13,269
(c) $2,218
(d) $7,780
8) Lambda sold a capital property on October 31, 2023 for $200,000 with a cash down
payment of $15,000. The balance of $185,000 is payable on October 31, 2027. The
adjusted cost base of the property was $115,000 and the selling costs were $7,000. Which
one of the following amounts represents the minimum taxable capital gain (rounded to
the nearest dollar) in 2023?
(a) $39,000
(b) $5,850
(c) $7,800
(d) $15,600
Test Bank for Introduction to Federal Income Taxation in Canada 44th Edition (2023-2024) By Nathalie Johnstone, Devan Mescall, Jul
Robson
,Test Bank for Introduction to Federal Income Taxation in Canada 44th Edition (2023-2024) By Nathalie Johnstone, Devan Mescall, Jul
Robson
9) Scarpy Ltd. is a public company and a manufacturer with a December 31 year-end. On
January 1, 2023, the undepreciated capital cost for Class 10.1 was $17,850. The Class
10.1 car was purchased in 2021 for $35,000. During 2023, it was sold for $21,000. A new
automobile was purchased for $41,810, which included HST of $4,810. ABC Ltd. is
registered to collect and remit HST. What is the maximum CCA allowed combined
(rounded to the nearest dollar) for the two cars for 2023?
(a) $18,306
(b) $18,878
(c) $20,984
(d) $17,798
10) Jonas Laliberte is a self-employed therapist. He meets with all of his clients in his
400 square foot home office. The entire house has a square footage of 2,400 square feet.
Greg incurred the following costs:
Utilities $1,600
House insurance 700
Business liability insurance 500
House maintenance 1,000
Mortgage interest 3,700
Property tax 1,100
Office supplies 500
What are the total expenses deductible from business income?
(a) $1,000
(b) $1,350
(c) $1,517
(d) $2,350
11) K Corporation Inc., a public company, owns a restaurant business that it carries on in rented
premises. The lease was signed January 1, 2022 and expires on December 31, 2027 (six years
in total), and has two successive renewal options for two years each. K Corporation Inc. had
an opening balance in 2023 in Class 13 of $26,000 that resulted from $32,000 of leasehold
improvements made during the 2022 taxation year. K Corp Inc. made an additional $14,000
of leasehold improvements to the same premises during its 2023 taxation year-end which
ends December 31, 2023. What is the maximum CCA that K Corp. Inc. can claim in 2023 for
its Class 13 assets?
(a) $3,000
(b) $7,000
(c) $6,000
(d) $9,000
12) During the 12-month period ended December 31, 2022 ABC Co., a CCPC, purchased a
$40,000 (excluding tax of HST of 13%) passenger vehicle for use by its salesperson in
conducting his employment. What is the maximum capital cost allowance that ABC Co.
can claim for 2022, assuming that the company is a HST registrant (i.e., the company
remits HST)?
(a) $16,200
(b) $40,680
(c) $20,340
(d) $36,000
Test Bank for Introduction to Federal Income Taxation in Canada 44th Edition (2023-2024) By Nathalie Johnstone, Devan Mescall, Jul
Robson
