Canadian Income Taxation: Planning & Decision Making 2025–2026 – Complete Question Bank & Solutions

1. Award:V



WhichVofVtheVfollowingVisVnotVconsideredVtoVbeVaVseparateVentityVforVtaxVpurposesVinVCanada?


V AnVindividual


V

V AVproprietorshipV

V AVcorporationV

V AVtrust




AVproprietorshipVisVcorrectVasVtheVentitiesVsubjectVtoVtaxVonVincomeVinVCanadaVareVindividuals,Vcorpora



2. Award:V



WhichVofVtheVfollowingVattitudesVandVactionsVisVmostVlikelyVtoVhelpVdecision-makersVdevelopVanVefficien


V CashVflowsVshouldVbeVconsideredVfromVaVbefore-taxVperspectiveVwhenVmakingVdecisions.

V FunctionalVmanagersVshouldVnotVbeVheldVresponsibleVforVtheVtaxVeffectsVofVdecisionsVwithinVt

V V TaxVcostsVtoVaVbusinessVshouldVbeVregardedVasVcontrollableVexpenses,VmuchVlikeVproductVco


V AllVmanagersVshouldVownVaVcopyVofVtheVIncomeVTaxVAct.



TaxationVshouldVbeVconsideredVinVallVaspectsVofVbusinessVplanningVonVanVongoingVbasis.



3. Award:V



WhichVofVtheVfollowingVstatementsVisVtrue?



V DividendsVpaidVbyVaVcorporationVareVdeductibleVbyVthatVcorporationVandVareVaVformVofVpropertyV

cipient.V

V DividendsVpaidVbyVaVcorporationVareVdeductibleVbyVthatVcorporationVandVareVaVformVofVbusinessV

cipient.


V DividendsVpaidVbyVaVcorporationVareVnotVdeductibleVbyVthatVcorporationVandVareVaVformVofVbusiness

, V cashVflowVbefore-tax.




Decision-makingVshouldValwaysVaddressVtheVafter-taxVvalues.

,5. Award:V



IncomeVtaxVisVcalculatedVforVwhichVofVtheVfollowingVjurisdictionalVgroups?



V Municipal,Vprovincial,VandVfederalV

V Municipal,Vfederal,VandVforeign


V

V Provincial,Vfederal,VandVforeignV



V Municipal,Vprovincial,VandVforeign




CanadianVtaxpayersVareVusuallyVsubjectVtoVprovincial,Vfederal,VandVforeignVtaxVonVinternationalVincome.



6. Award:V



TwoVinvestorVcorporationsVmayVnotVenterVjointlyVintoVwhichVofVtheVfollowing?



V JointVventureV

V Partnership


V SeparateVcorporationV


V V Proprietorship




AVproprietorship,VsinceVitVisVanVoperationVrunVbyVoneVindividual.



7. Award:V



WhichVofVtheVfollowingVstatementsVisVtrue?


V CashVflowVshouldVneverVbeVcalculatedVonVanVafter-taxVbasis.

V V TheVtaxVcostVtoVaVbusinessVshouldVbeVregardedVasVaVcostVofVdoingVbusiness.


V IncomeVtaxVcannotVbeVtreatedVasVaVcontrollableVcost.

V TheVvalueVofVanVenterpriseVshouldVbeVbasedVonVpre-taxVcashVflow.



TaxVcostsVareVaVregularVpartVofVdoingVbusinessVandVthereforeVhaveVanVimpactVonVcashVflow.



8. Award:V

, 9. Award:V



WhichVofVtheVfollowingVlistsVaccuratelyVnamesVtheVfiveVgeneralVincomeVcategoriesVforVtaxVpurposes?



V Business,VInterest,VEmployment,VCapitalVGains,VOther

V

V Business,VProperty,VEmployment,VCapitalVGains,VForeign


V

V Business,VProperty,VEmployment,VCapitalVGains,VOtherV



V Business,VProperty,VEmployment,VInvestments,VOther




IncomeVforVtaxVpurposesVisVcategorizedVasVBusiness,VProperty,VEmployment,VCapitalVGains,VandVOther.



10. Award:V



Proprietorships,Vcorporations,Vpartnerships,VlimitedVpartnerships,VjointVventures,VandVincomeVtrustsV


areVallV V categoriesVofVincomeVforVtaxVpurposes.


V taxVjurisdictions.



V examplesVofVfinancialVinstruments.V V

V formsVofVbusiness.




ThisVlistVcomprisesVtheVmanyVformsVofVbusinessesVthatVmayVbeVcreated.



11. Award:V



WhichVofVtheVfollowingVstatementsVregardingVtaxationVwithinVjurisdictionsVinVCanadaVisVtr


ue?V


V FederalVandVprovincialVorVterritorialVtaxVbracketsVareValwaysVidenticalVtoVoneVanothe


r.

V OnlyVfederalVtaxesVapplyVtoVindividualsVwhileVbothVfederalVandVprovincialVorVterritorialVtaxesVa

V V BothVfederalVandVprovincialVorVterritorialVtaxesVapplyVtoVCanadianVtaxpayers.



V OnlyVfederalVtaxesVapplyVtoVcorporationsVwhileVbothVfederalVandVprovincialVtaxesVapplyVtoVind