BUS 345 Answers to Chp 3 Assignment Problems

BUS 345 Answers to Chp 3 Assignment Problems - Chapter...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
√Chapter Three Solutions Solution to Assignment Problem Three - 1 Two categories of persons are liable for Canadian income tax. The first of these categories is specified in ITA 2(1) as follows: An income tax shall be paid, as required by this Act , on the taxable income for each taxation year of every person resident in Canada at any time in the year. In addition, ITA 2(3) specifies that a non-resident who: (a) was employed in Canada; (b) carried on a business in Canada; or (c) disposed of a taxable Canadian property, is also liable for Canadian income tax. You should note that the term person as it is used in the Income Tax Act includes corporations and trusts, as well as individuals. Solution to Assignment Problem Three - 2 The term Net Income For Tax Purposes is commonly used to refer to income as determined under Part I, Division B of the Income Tax Act . While Division B does not contain a definition of this income figure, ITA 3 contains a formula for the determination of this amount. In general terms, Net Income For Tax Purposes would include: Net income from employment (Subdivision a). Net income from business or property (Subdivision b). Taxable capital gains net of allowable capital losses (Subdivision c). Other sources of income and other deductions (Subdivisions d and e). Losses from employment, business, property, and allowable business investment losses can be deducted as long as the total Net Income For Tax Purposes does not go below zero. In somewhat simplified terms, Taxable Income is simply Net Income For Tax Purposes, less certain deductions that are specified in Division C of the Income Tax Act . As will be explained in subsequent Chapters, these deductions include loss carry overs from other years, a portion of stock option income, the northern residents deduction, and home relocation loan amounts.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Solution to Assignment Problem Three - 5 Mr. Leduc would be considered a part year resident and would only be assessed for Canadian income taxes on worldwide income during the portion of the year prior to his ceasing to be a resident of Canada. IT-221R3 points out that in using the part year rules, a person ceases to be a Canadian resident as of the latest of three dates: 1. The date on which he/she departs from Canada. 2. The date on which his/her spouse and/or dependent children depart from Canada. 3. The date on which residency is established in the country of destination. While Mr. Leduc departed from Canada on February 12th, he will be considered a Canadian resident until his family’s departure on June 20th. The fact that his family remained in Canada would lead to this conclusion. While not essential to this conclusion, the fact that he did not sell his Canadian residence until that date would provide additional support. His Canadian salary from January 1 to February 11 would be subject to Canadian taxes. In addition, his U.S. salary for the
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/07/2008 for the course BUS 343 taught by Professor Leung during the Fall '08 term at Kwantlen Polytechnic University.

Page1 / 9

BUS 345 Answers to Chp 3 Assignment Problems - Chapter...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online