midterm 1 S2 4561


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YORK UNIVERSITY MID-TERM EXAM – SUMMER 2010 (S2) AP/ADMS 4561 TAXATION OF PERSONAL INCOME IN CANADA Number of Questions: 4 Number of Pages: 8 including cover Time allowed: 2 hours (70 marks) ______________________________________________________________ Instructions (Please read before you start the test) : 1. You may use a non-programmable calculator and the Mid-term Exam Information Sheet included with this exam. You may use your Income Tax Act. Highlighting, underlining, and the use of tabs with section numbers only are allowed. Nothing can be written in your Act or on the tabs (other than section numbers) and no other materials can be inserted in your Act . Use of unauthorized aids is considered to be a breach of the Senate Policy on Academic Honesty. Acts that contain unauthorized writing or materials will be confiscated in the exam and used as evidence. You cannot use a dictionary or any other aids. 2. Time allotments are provided as a suggestion for the appropriate amount of time for each question. However, you are responsible for your own time. 3. The exam must be prepared in ink and “whiteout” not used for the exam to be considered for re- marking. If the exam is not prepared in ink or if whiteout is used, it will not be remarked. 4. You only need to cite sections of the Act in Question 3. 5. Questions 1 and 2 are to be answered in your solution booklet. ONLY ONE SOLUTION BOOKLET IS ALLOWED. If you feel you require more information in a fact situation, outline the exact nature of the information CLEARLY and specify how it would affect your decision, but do not contradict facts or assume the abnormal. Ignore the effect of leap years in your answers. 6. Questions 3 and 4 are to be answered on this question paper. This question paper must be handed in inside the solution booklet. 7. Please raise your hand if you have any questions during the exam. 8. Assume that the prescribed rate applicable to interest-free and low-interest loans throughout the 2009 calendar year is 3% for the purposes of this exam. _______________ _______________ _________ LAST NAME FIRST NAME SECTION # YOU MUST HAND IN THIS QUESTION PAPER ALONG WITH YOUR SOLUTION BOOKLET 1
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Question 1 (2 4 marks; suggested time 41 minutes) Mr. West is 40 years old and a commissioned salesman at SALEFORU Inc. (a Canadian- controlled private corporation). He has asked for your assistance in preparing his 2009 tax return. He has provided you with the following information for the 2009 year: Gross Salary $65,000 Payroll deductions: Income taxes $15,000 CPP premiums 1,990 EI premiums 720 RPP contributions 850 Group accident disability insurance premiums 200 Commissions $9,000 In 2009, SALEFORU paid $300 of group accident disability insurance premiums for Mr. West’s coverage under the plan. SALEFORU Inc. also paid $375 to have Mr. West see a financial counsellor for advise relating to his investments. SALEFORU installed recreational facilities at its head office.
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