Other Sources of Income and
Deductions in Computing Income
Other Sources of Income
Other Sources of Income
Benefits in the nature of pensions
Retiring allowance and other payments on termination of
Question 15 (49 minutes) [Chapter 4, 5]
The following information is taken from the financial statements and audit working papers of
Eldridge Asset Sales Inc. (EASI) for its fiscal year ended December 31, 2012.
Eldridge Asset Sales Inc.
Chapter 1: The Language of Ethics
Sample Discussion Answers
These answers should be treated as supplemental to your own thoughts and analysis and
are by no means comprehensive. Feel encouraged to include your own experiences and
points of disagreement wit
Sample Question 5-27
Jane was the audit supervisor in charge of the audit of an advertising agency. Unfortunately, two
other audit supervisors in the office resigned and moved on to other positions. Rather than hiring
or promoting another supervisor, the
Sample Question 7-17
You are the auditor in charge of the audit of the municipality of Sackville, New Brunswick. The
municipality has a budget of $65 million and has had a balanced budget for the last three years.
There are about 10 people in the accounti
Sample Question 8-23
The following audit procedures were performed in the audit of inventory to satisfy specific
balance-related audit objectives. The audit procedures assume the auditor has obtained the
inventory count records that list the clients inven
Question 12 (35 minutes) [Chapter 3]
Iona has come to you to help her compute her employment income for the year. Her details are as follows.
Ionas income for the year is as follows:
Less: CPP and EI contributions
Less: RPP Contributions (mat
Solution 1 (Advanced)
Intention of the Taxpayer
(A) Primary intention: The corporation intended to construct an apartment building on the property, not to purchase
the property itself for resale at a profit. Unexpected circumstances resulted in the sale o
Solution 4 (Advanced)
August 27, 2001
P of D (900 @ $24.50) .
ACB (900 @ $28.75)(1) .
Superficial loss denied (600/900 $4,585).
Allowable capital loss (3/4 $1,528) .
Solution 11 (Advanced)
Note to instructors: Reference to Schedule 1 of the T2 corporate tax return may be helpful in completing
Net income per financial statements .
Provision for income taxes . $2,528,000
Solution 2 (Basic)
The $132,000 gross salary will be included in income for tax purposes in the year of receipt [ssec. 5(1)].
The allowance of $25,000 for moving will be included in income for tax purposes in the year of receipt, because
there is no exclu
Background and Introduction
History and Legislation Canadian Tax System
Brief history of the Income Tax Act
Constitutional basis for income taxation
Introduction to Income Tax Legislation
Tax Principles and Concepts
Liability for Tax
Liability of Individuals for Income Tax
Main criterion for income tax liability in Canada:
Residence [ssec. 2(1)]
An income tax shall be paid as required
by this Act on the taxable income for each
taxation year of every pers
Under Part I, Division B, subdivision a:
Sec. 5 Salary, wages, and gratuities
Sec. 6 Other income inclusions arising from
Sec. 7 Stock option benefits
Sec. 8 Deductio
Income from Business:
General Concepts and Rules
Income from a business (sec. 9)
What is profit?
The role of GAAP
Business Income vs. Capital Receipt
Why distinction important?
Income receipts are fully taxed