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SAINT MARY’S UNIVERSITY DEPARTMENT OF ACCOUNTING ACCOUNTING 4453.1 FINAL EXAMINATION DECEMBER 17, 2010 QUESTION 1 – 10 MARKS Fully evaluate 2 of the following tax proposals as potential inclusions in the 2011 federal budget: (a) A super deduction of 125% of the amount contributed to an RRSP, to a maximum of $5,000. (b) A proposal to include the employer’s share of health and dental plan premiums in an employee’s taxable income. (c) A proposal to permit CCPCs to report their accounting net income as their taxable income. (d) A proposal to repeal the individual tax credit for federal political contributions. (e) A proposal to increase the annual Tax Free Savings Account limit to $10,000. QUESTION 2 – 5 MARKS Felix, originally from Spain, has lived in Halifax since 1997. He has never applied for landed immigration or citizenship status in Canada. He has been employed by an offshore oil drilling company since his arrival in Canada. On February 1, 2010 his employer transferred him to a drilling location in the Middle East. His spouse accompanied him to the new location. Both Felix and his spouse have remained there since the move. Believing that he would be out of Canada for some time, Felix and his spouse sold their home shortly before their move. They have no children. Felix’s employer deposits ½ of his net pay into a Halifax bank account, and ½ into a bank in the Middle Eastern country. The employer also deducts income tax, Canada Pension and Employment Insurance from Felix’s gross pay. Felix is also a member of the employer’s health insurance and pension plans. REQUIRED: (a) State all reasons the taxpayer may be a resident of Canada for tax purposes in 2010 AND all reasons he may not be a resident for tax purposes in 2010. (b) Based on (a), would you consider Felix a resident for tax purposes in 2010? Why? QUESTION 3 – 18 MARKS REQUIRED: Outline the tax consequences of the following independent situations. (a) Frank and Joyce have lived in their Robie Street residence since 1979. Now over 80 years of age, they have decided to move to a rented condo and allow their unmarried daughter and her 2 sons to live in the Robie Street home. Frank and Joyce do not own any other properties. (b) Sam and Anne, who are both retired, live in a condo they own in Halifax. Because of their age, they cannot properly maintain their cottage near Lunenburg. They would like to transfer ownership of the cottage to Julie, their only child, who is 42 years old and unmarried. They do not expect to ask Julie to pay them for the cottage. 1
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(c) The Quik-n-Tastee restaurant was robbed last night. In addition to damage to the property in the amount of $10,000, the robbers got away with $12,000 cash. Insurance will cover the property damage. Management does not have insurance
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This note was uploaded on 01/07/2012 for the course ACCT 4453 taught by Professor Gorman during the Spring '11 term at Dalhousie.

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