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Unformatted text preview: CHAPTER 9 OTHER INCOME, OTHER DEDUCTIONS, AND SPECIAL RULES FOR COMPLETING NET INCOME FOR TAX PURPOSES Review Questions 1. In addition to income from employment, business, property, and capital gains, taxpayers must include income from other sources when determining their income for tax purposes. How does the Income Tax Act limit the scope of other sources of income? 2. Explain why the receipt of property from an inheritance is not included in net income for tax purposes. 3. Can an individual deduct for tax purposes the amount of regular support payments to a former spouse? Would it matter if that individuals only source of income were from interest on bond investments? Explain. 4. Why is the category other deductions considered to be the last test for determining the deductibility of an expenditure? 5. Briefly explain why an RRSP is an attractive investment. 6. If you hold investments both inside and outside an RRSP and usually invest in both corporate bonds and corporate shares, which type of investment would you prefer to hold within the RRSP? Explain. 7. Briefly explain why a TFSA is an attractive investment. How does a TFSA differ from an RRSP? 8. Briefly explain the tax treatment of a RESP. 9. What is the significance of the special rules for net income determination, and how do they relate to the five categories of income that are taxable? 10. When in doubt, it is always best to claim a deduction for an expenditure because the worst possible result is that the CRA will simply deny the deduction. Is this statement true? Explain. 11. If a group of business assets is being sold for a total agreed price, is it important that the vendor and the purchaser seriously consider how the total price will be allocated to the separate assets in the group? Explain. 12. What are the tax consequences if a parent sells property to a child at a price that is less than the actual value of the property? What difference would it make if the property were simply gifted to the child? 13. What are the tax consequences if an individual sells property to his or her spouse at a price that is less than the propertys market value but more than its cost? 14. How are property income (losses) and capital gains (losses) treated for tax purposes if the funds used to acquire the property were provided by the taxpayers spouse? How does the tax treatment differ if the funds are provided by the taxpayers parent? 15. What is the implication to the employer and to the employee if the employer delays the payment of remuneration to the employee? 16. What difference does it make for tax purposes when an individuals last will and testament bequeaths property to a spouse, rather than to a child?...
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This note was uploaded on 07/03/2011 for the course BUS 3120 taught by Professor Weedon during the Spring '10 term at University of Winnipeg.
- Spring '10