1. An individual was the sole shareholder and employee of a Canadian corporation (Canco). They received employment...

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Question:

1. An individual was the sole shareholder and employee of a Canadian corporation (Canco). They received employment income of $50,000 and rental income of $12,000 from Canco. Canco earned net income of $100,000, after the payment of the two amounts to the individual. What would be the individual’s income for the year?

a. $162,000

b. It would depend on the year end of Canco.

c. $62,000

d. $50,000

2. In the current year, G had a capital gain of $40,000 and a business loss of $12,000. Determine G’s net income for tax purposes for the current year.

3. A Canadian corporation has a branch office in England. It earns CDN $1,000,000 and pays 40% UK taxes. The Canadian corporate tax rate is 25%. Why would Canada not collect taxes on the UK branch income?

a. Canada has no right to tax the income under the terms of the tax treaty between the two countries

b. The UK tax rate is higher than the Canadian tax rate on the income.

c. Canada taxes only Canadian sourced income of Canadian corporations

d. The UK branch would be responsible for paying Canada's share of the taxes it collects, under the terms of the tax treaty between the two countries.

4. The tax return filing deadline and the balance of tax due date for individuals in Canada, other than deceased individuals, is…

a. Either April 30 or June 15 (if the individual or their spouse carries on a business,) of the following year. April 30th of the following year is the balance of tax due date in all cases

b. April 30th of the following year

c. Either April 30 or June 15, (if the individual or their spouse carries on a business) of the following year.

d. June 15th of the following year

5. O is employed as a salesperson and spends most of the time working in his home office. His office occupies 10% of the total space in his home. He paid the following expenses in the current year: Utilities $5,200; House insurance $1,400; Mortgage interest $10,800; Property taxes $6,700; Repairs & maintenance $2,300. What is the maximum deduction from employment income for tax purposes available to O in the current year, assuming he received $60,000 of commission income?