1. As a business owner there is an opportunity to split income among family members by paying salaries to your family members. Identify two factors that limit the amount that can be deducted as salaries paid to family members.

2. The owner of the Great Cup Company was concerned when the Canada Revenue Agency (CRA) reassessed the company for additional taxes. You were provided with the following information concerning the Cost of Goods Sold: Opening inventory (at cost) $30,000, Goods purchased during the year $90,000, Goods available for resale $125,000. Ending inventory (at the lower of cost or market) (42,000) Cost of Goods Sold $83,000 You determine the cost of this year's closing inventory was $43,000. Explain to the owner why the taxes were reassessed. What is the correct amount of the Cost of Goods Sold?

3. What are the three key differences between the computation of business income and employment income.

Answer rating: 100% (QA)

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