1. Which of the following is not considered to be a separate entity for tax purposes in Canada?
2. Which of the following attitudes and actions will help decision-makers develop an eff
Carrying on business in Canada takes into account lots of things: not specifically defined. If
not resident engaged in it they WILL BE DEEMED RESIDENT
Location where contract was established
Place of substantial operations. where profits arise from
vHASKAYNE SCHOOL OF BUSINESS
Course Outline Fall 2016
Noreen Irvine, BSc, CMC
Both lectures M/W 1:30 2:30 pm, or by appointment
B- Business or property income
C- Taxable capital gains and other allowances
D- Other incomes
So world wide income (DIV.A) + net taxable capital gains (DIV.B) - general deductions not
already subtracted above (DIV.C) Negative amounts on loss
ACCT 421: TEXTBOOK NOTES
History: income war tax imposed in 1917 to finance ww1. Turned into income tax act in 1948.
Currently income tax= 62% of govt revenue .personal tax= 4x the corporate taxes collected
Tax law passing process: dept. of fin
Why study Tax?
Tax affects decisions you make today for future transaction. Ex: selling property, buying a house
etc you can compute taxes and make decision accordingly
Simplicity- basic req. of tax system. but changing govt, demographics, economies etc r
Supplies of goods/services:
1) Taxable: subjected to GST/HST/. Supplier entitled to full input tax credit
2) Zero rated: tax at rate 0% . Supplier entitled to full input tax credit (ex: prescription good,
med services. Exported goods, basic groceries. Aff
Deeming rule to establish corporate residence not used too often
No concept of part time as corp tax year starts when it begins operation and ends when
it ends operation
Corporations started in Canada after april,1965 deemed Canadian. A
IF AN INDIVIUAL BY DEFINITION CAN BE CONSIDERED RESIDENT OF BOTH COUNTRIES:
Tie Breaker rule
1) where permanent home is available. if in both countries, deemed resident of country
where more ties can be traced
2) If ties cant be traced well deemed residen
ACCT 421: CLASS NOTES
If youre a non resident but work in Canada- u gotta file tax return on employment income in
Canada. (same thing applies for business income. if u non res but have business in Canada)
3 basic types:
2) Non resident
421 TEXTBOOK QUESTIONS:
2825, MULTIPLE CHOICE:
1) B 2) C 3) C 4) A 5) B 6)
A) part time b) non resident c) non resident d) part year resident e) deemed Canadian resident
f) non resident
TAX YEAR IN QUESTION = 1964
A) Canadian resid
Part Year Resident:
Taxed on worldwide income while resident in Canada and on Canadian income will not
in Canada. Requires you to not be a resident for a part of the year
Clean break must be made when you leave to qualify as part year: The date you
1. Which of the following scenarios would be most appropriate for a Section 85 rollover?
A. A shareholder of a corporation wishes to transfer his vehicle to his corporation. The vehicle originally cost
$20,000 and has a market value of $12,000.
1. The manager at Big Company Corporation has decided to sell a piece of capital equipment after the
company's year-end in order to avoid paying capital gains tax this year. Which tax planning method will the
manager be using?
A. Transferring i
1. Joe is a Canadian citizen. In March of 20X1, Joe was transferred to the United States with his company. His
wife and child moved with him at that time. Joe chose not to sell his house, and instead, lends it to his family
during the winter mo
1. Susan was provided with a company car to drive during March to December of the current year. The car cost
the company $22,000 plus GST and PST totalling 11%. Susan drove the car a total of 15,000 kilometres during
the year. 11,000 kilometres
1. TriStar Industries was recently denied the deduction of the life insurance premiums on the life insurance
policies of its key executives on the annual tax return. Which of the following general limitations to business
profit determination be
1. Which of the following statements concerning the tax treatment of interest income is true?
A. Individuals must accrue interest on a daily basis.
B. Private corporations do not have to accrue interest on a daily basis.
C. Foreign interest inc
1. Green Gardens Inc. purchased a piece of Class 8 machinery in 20X0. The cost of the machine was $5,000. In
20X2, the machine was sold for proceeds of $2,000 and there were no other purchases or disposals during the
year. The UCC in the Class
1. Sarah Green purchased a piece of land in 20X8 with plans to build and operate a greenhouse and evergreen
nursery. Sarah is a full-time teacher, but has always dreamed of also running her own business Now, one year
later, she has not yet star
1. Which of the following deductions are allowed as other' deductions for tax purposes?
A. Contributions toa child's RESP, fees for an appeal in relation to an assessment under the Income Tax Act,
and contributions to an individual's RRSP.
1. ABC. Ltd. had unused allowable capital losses of $20,000 during the current fiscal year and an unused
business loss of $10,000. Which of the following statements is true?
A. All of the losses will be lost if not used in this fiscal year.
1. When shares are transferred from one group of shareholders to another and there is a change in control,
which of the following is correct?
A. Any net capital losses that arise following the change in control will be lost.
B. Non-capital loss