TEST BANK
Introduction to Federal Income Taxation in
ST
Canada 2025-2026
Julie Robson, Devan Mescall, Nathalie Johnstone, David Lin
UV
────────────────────────────────────────────────────
46th Edition
IA
?_
AP
TEST BANK
PR
OV
ED
??
, Test Bank
Introduction to Federal Income Taxation in Canada, 2025–2026
Julie Robson · Devan Mescall · Nathalie Johnstone · David Lin
46TH EDITION | 2025–2026
ST
TABLE OF CONTENTS
UV
PART ONE — FOUNDATIONS OF CANADIAN TAXATION
Chapter 01 Introduction
Chapter 02 Liability for Tax
PART TWO — SOURCES OF INCOME
IA
Chapter 03 Employment Income
Chapter 04 Income From Business: General Concepts and Rules
?_
The Capital Cost Allowance System for Depreciable Property
Chapter 05
Including Intangibles
Chapter 06 Income From Property
Chapter 07 Capital Gains
AP
PART THREE — SPECIAL TRANSACTIONS & COMPUTATIONS
Chapter 08 Non-Arm's Length Transfers and Other Special Circumstances
Chapter 09 Other Sources of Income and Deductions in Computing Income
PR
Computation of Taxable Income and Taxes Payable for
Chapter 10
Individuals
Computation of Taxable Income and Tax After General
Chapter 11
Reductions for Corporations
OV
PART FOUR — CORPORATE & OWNER-MANAGER TAXATION
Integration for Business and Investment Income of the Private
Chapter 12
Corporation
Shareholder-Manager Remuneration and Tax Planning for the
Chapter 13
ED
Owner-Manager
Chapter 14 Rights and Obligations Under the Income Tax Act
PART FIVE — BUSINESS TRANSACTIONS & RESTRUCTURING
??
Chapter 15 Purchase and Sale of a Business — Share Transactions
Chapter 16 Corporate Distributions, Asset Sales, and Winding Up
Tax Deferred Transactions: Section 85, Section 86, Estate
Chapter 17
Freeze Transactions, Amalgamations, and Wind-Ups
, PART SIX — EMERGING TOPICS & SPECIALIZED AREAS
Chapter 18 The Sustainability Landscape and Tax
Chapter 19 Partnerships, Trusts, and Death of a Taxpayer
ST
Chapter 20 International Taxation in Canada
Chapter 21 Goods and Services Tax (GST)/Harmonized Sales Tax (HST)
Chapter 22 Data Analytics and Information Systems in Tax
UV
IA
?_
AP
PR
OV
ED
??
, Test Bank Part 1
ST
Solution file for MCQs (correct answer is highlighted in yellow)
Chapter 2
UV
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.
IA
Feedback:
(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
would also apply.
Question 2
(A) Take his wife and children with him to Germany.
AP
(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.
PR
(A) is incorrect, because taking his wife and children with him to Germany is not feasible, since the couple is legally
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).
OV
Question 3
(A) $20,000
(B) $70,000
(C) $90,000
(D) $250,000
Feedback:
ED
(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.
??
Introduction to Federal Income Taxation in
ST
Canada 2025-2026
Julie Robson, Devan Mescall, Nathalie Johnstone, David Lin
UV
────────────────────────────────────────────────────
46th Edition
IA
?_
AP
TEST BANK
PR
OV
ED
??
, Test Bank
Introduction to Federal Income Taxation in Canada, 2025–2026
Julie Robson · Devan Mescall · Nathalie Johnstone · David Lin
46TH EDITION | 2025–2026
ST
TABLE OF CONTENTS
UV
PART ONE — FOUNDATIONS OF CANADIAN TAXATION
Chapter 01 Introduction
Chapter 02 Liability for Tax
PART TWO — SOURCES OF INCOME
IA
Chapter 03 Employment Income
Chapter 04 Income From Business: General Concepts and Rules
?_
The Capital Cost Allowance System for Depreciable Property
Chapter 05
Including Intangibles
Chapter 06 Income From Property
Chapter 07 Capital Gains
AP
PART THREE — SPECIAL TRANSACTIONS & COMPUTATIONS
Chapter 08 Non-Arm's Length Transfers and Other Special Circumstances
Chapter 09 Other Sources of Income and Deductions in Computing Income
PR
Computation of Taxable Income and Taxes Payable for
Chapter 10
Individuals
Computation of Taxable Income and Tax After General
Chapter 11
Reductions for Corporations
OV
PART FOUR — CORPORATE & OWNER-MANAGER TAXATION
Integration for Business and Investment Income of the Private
Chapter 12
Corporation
Shareholder-Manager Remuneration and Tax Planning for the
Chapter 13
ED
Owner-Manager
Chapter 14 Rights and Obligations Under the Income Tax Act
PART FIVE — BUSINESS TRANSACTIONS & RESTRUCTURING
??
Chapter 15 Purchase and Sale of a Business — Share Transactions
Chapter 16 Corporate Distributions, Asset Sales, and Winding Up
Tax Deferred Transactions: Section 85, Section 86, Estate
Chapter 17
Freeze Transactions, Amalgamations, and Wind-Ups
, PART SIX — EMERGING TOPICS & SPECIALIZED AREAS
Chapter 18 The Sustainability Landscape and Tax
Chapter 19 Partnerships, Trusts, and Death of a Taxpayer
ST
Chapter 20 International Taxation in Canada
Chapter 21 Goods and Services Tax (GST)/Harmonized Sales Tax (HST)
Chapter 22 Data Analytics and Information Systems in Tax
UV
IA
?_
AP
PR
OV
ED
??
, Test Bank Part 1
ST
Solution file for MCQs (correct answer is highlighted in yellow)
Chapter 2
UV
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.
IA
Feedback:
(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
would also apply.
Question 2
(A) Take his wife and children with him to Germany.
AP
(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.
PR
(A) is incorrect, because taking his wife and children with him to Germany is not feasible, since the couple is legally
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).
OV
Question 3
(A) $20,000
(B) $70,000
(C) $90,000
(D) $250,000
Feedback:
ED
(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.
??
