Alpha Ltd owns 100% of both Beta Ltd. and ABC Ltd. hence they are all associated. Alpha
Question:
Alpha Ltd owns 100% of both Beta Ltd. and ABC Ltd. hence they are all associated. Alpha owns 10% of Hummer Ltd which is not an associated company. Alpha also owns 15% of Taxi Inc. which is also not an associated company. Each of the five corporations has at least $500,000 of active business income earned in Canada.
What is the maximum combined corporate income on which the five corporations can claim the small business deduction?
Group of answer choices
(a) $1,000,000
(b) $1,500,000
(c) $2,000,000
(d) $2,500,000
2) Bona-fide arrangements means?
Group of answer choices
(a) the interest rate is equal to or less than the market rate
(b) the interest rate is equal to the inflation rate
(c) that as long as a lawyer is involved the transaction created are a bonafide arrangement
(d) that the payments must be legally enforceable and paid back within a reasonable
period of time
3) Which statement is FALSE when it comes to the purposes of the Canadian Foreign Country tax treaties:
Group of answer choices
(a) Disallow the exchange of tax-related information because of the privacy laws
(b) To establish who has priority over the legislation of either contracting counties
(c) Prevent tax evasion
(d) To determine the distribution of tax revenues between countries
4) This is not an exception to the 15(2) rule which apply to a shareholder or related persons who are also executive or employees of the lender corporation. They must use the loan to:
Group of answer choices
(a) purchase or construct a residential property for rent
(b) purchase preferred shares of the corporation or related corporation
(c) purchase an automobile to be used in the performance of the duties of his/her office or employment.
(d) purchase treasury shares of a related corporation
5) The purpose of transfer pricing legislation is to:
Group of answer choices
(a) to maximize the taxes on big multi-national companies only
(b) to ensure that withholding taxes are paid for all companies
(c) ensure that transfer prices between non-related persons are set at arm's length prices
(d) ensure that transfer prices between related persons are set at arm's length prices
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws