TAXATION MULTIPLE CHOICE: NO NEED TO EXPLAIN, PLEASE... ----------------------------------------------------------------------------------------------- Question 1 (1 point) Marvin purchased a large piece of land 5 years ago when a highway bypass was rumoured to have an exit being built nearby. He had planned to subdivide the land into building lots within 5 years, but has done no work on the land yet. He has rented the land each summer over the Labour Day weekend for $500. A local non-profit organization holds a huge neighbourhood garage sale on that weekend. A heart attack has convinced Marvin to slow down. As a result, he has advertised the land for sale online and an interested buyer is offering to purchase it at a price that would give him a large gain. That gain would be taxed as: Question 1 options: property income. business income. a capital gain. a taxable capital gain. -------------------------------------------------------------------------------------------------------------- Question 2 (1 point) Vanessa moves to Germany on July 15 of the current year. She is 35 and has lived in Canada all of her life. Which one of the following best indicates Vanessa's Canadian residency status for the current year? Question 2 options: A deemed resident (sojourner) A non-resident A full-time resident A part-year resident ------------------------------------------------------------------------------------------------------------- Question 3 (1 point) Jerry collects baseball cards as a hobby. During the current year, he acquired twenty-five different items at a total cost of $29,550. During the year, he sold each of those items and received total proceeds of $55,900. What is the effect of these transactions on Jerry's Net Income For Tax Purposes? Question 3 options: Jerry has a taxable capital gain of $26,350. Jerry has a taxable capital gain of 13,175. Jerry has business income of $26,350. Because the collection was a hobby, the gain does not have to be included in Net Income For Tax Purposes. ------------------------------------------------------------------------------------------------------------- Question 4 (1 point) With respect to claiming tax credits related to an individual's child, which of the following statements is NOT correct? Question 4 options: To claim the eligible dependant credit for a child, the child must be under the age of 18 at some time during the year. The Canada caregiver credit for a child under 18 cannot be claimed if the parent is claiming the eligible dependant credit for that child. An individual cannot claim the eligible dependant credit if they are living with, supporting, or being supported by a spouse. To claim the eligible dependant credit for a child, the child does not have to be a resident of Canada, provided they are living with the taxpayer. ------------------------------------------------------------------------------------------------------------- Question 5 (1 point) Fred Hopkins has employment income of $45,000, a business income of $14,000, capital gains of $20,000, capital losses of $12,000, and subdivision e deductions of $3,000. Fred's Net Income For Tax Purposes is equal to: Question 5 options: $36,000 $50,000 $39,000 $32,000 ----------------------------------------------------------------------------------------------------------- Question 6 (1 point) Income tax is calculated for which of the following groups of jurisdictions? Question 6 options: Municipal, provincial, and federal Provincial, federal, and international Municipal, federal, and international Municipal, provincial, and international --------------------------------------------------------------------------------------------------- Question 7 (1 point) Making contributions to an RRSP always involves what type of tax planning? Question 7 options: Tax avoidance and tax deferral. Tax deferral. Tax avoidance. Income splitting. ---------------------------------------------------------------------------------------------------------- Question 8 (1 point) - Ms. Floot has been out of Canada for several years. She is presumed to be a non-resident as long as certain tests are met. Indicate the condition that does NOT have to be met. Question 8 options: She did not leave a spouse or other dependants in Canada. She does not return to Canada on a regular or frequent basis. She did not leave personal property or social ties in Canada. She did not leave taxable Canadian property in Canada. ------------------------------------------------------------------------------------------------------- Question 9 (1 point) ABC Enterprises began operations on September 1 of the current year. It has chosen December 31 as its year end. On October 1 of the current year, the proprietorship purchased furniture and fixtures (class 8 CCA 20%) for $40,000. The maximum capital cost allowance on the furniture and fixtures for the current year ending December 31 will be: Question 9 options: $ 2,673.97. $ 4,010.96. $12,000.00. $ 4,000.00. -------------------------------------------------------------------------------------------------------------- Question 10 (1 point) For the 2019 taxation year, John Bookman had a taxable capital gain of $45,000 and a net business loss of $45,000, resulting in a Taxable Income of nil. Which of the following statements is correct? Question 10 options: John is not required to file a tax return for 2019. John must file a tax return on or before June 15, 2020. John must file a tax return on or before December 31, 2020. John must file a tax return on or before April 30, 2020. ------------------------------------------------------------------------------------------------------------ Question 11 (1 point) Ms. Loren dies on February 1, 2023. All of her income is from employment and she does not have a spouse or common-law partner. What is the latest date for filing her 2022 income tax return? Question 11 options: April 30, 2023. June 15, 2023. August 1, 2023. June 30, 2023. ---------------------------------------------------------------------------------------------------------- Question 12 (1 point) John Barron carries on a business as a sole proprietor and plans to file his 2022 income tax return on June 15, 2023. His balance-due day is: Question 12 options: April 30, 2022. April 30, 2023. June 15, 2023. June 15, 2022. ------------------------------------------------------------------------------------------------------------ Question 13 (1 point) Income tax is calculated for which of the following groups of jurisdictions? Question 13 options: Municipal, provincial, and federal Provincial, federal, and international Municipal, federal, and international Municipal, provincial, and international -------------------------------------------------------------------------------------------------------------- Question 14 (1 point) Bunly Im carries on a business as a sole proprietor. Which of the following dates are correct for the date by which his income tax return for a year must be filed (1st item) and his due date for the payment of any income taxes owing (2nd item)? Question 14 options: April 30, April 30. June 15, April 30. April 30, June 15. June 15, June 15. -------------------------------------------------------------------------------------------------------------- Question 15 (1 point) During the year, Ted Knight received worker's compensation payments totaling $25,000 as a result of an injury he suffered at work. His only other source of income for the year was his wages of $25,000. Which one of the following represents Ted's Net and Taxable Incomes for the year? Question 15 options: Net Income $25,000, Taxable Income $25,000. Net Income $30,000, Taxable Income $30,000. Net Income $50,000, Taxable Income $25,000. Net Income $50,000, Taxable Income $45,000. ---------------------------------------------------------------------------------------------------------------- Question 16 (1 point) For the 2022 taxation year, John Bookman had a taxable capital gain of $45,000 and a business loss of $45,000, resulting in net and taxable income of nil. Which of the following statements is correct? Question 16 options: John is not required to file an income tax return for 2022 John must file an income tax return on or before June 15, 2023. John must file an income tax return on or before December 31, 2023. John must file an income tax return on or before April 30, 2023. ------------------------------------------------------------------------------------------------------------- Question 17 (1 point) Greta died on September 10, 2022. She has never carried on a business. By what date must her final income tax return be filed? Question 17 options: April 30, 2023. April 30, 2024. March 10, 2023. June 15, 2023. ------------------------------------------------------------------------------------------------------ Question 18 (1 point) Which of the following could be required to file a GST return? Question 18 options: Chan's Clothing Store The Chan Foundation Min Chan All of the above could be required to file a GST return. ---------------------------------------------------------------------------------------------------- Question 19 (1 point) Which of the following would be considered by the CRA to be business income rather than property income or capital gains? Question 19 options: Profits from the sale of assets that were used to produce business income Profit from the sale of assets that were used to produce property income Profit from the sale of inventory items Both A and C -------------------------------------------------------------------------------------------------- Question 20 (1 point) Which of the following tax credits CANNOT be transferred to a spouse? Question 20 options: The age credit The disability credit The EI and CPP credits The pension income credit ----------------------------------------------------------------------------------------------- Question 21 (1 point) Of the following statements about medical expenses, which one is correct? Question 21 options: A taxpayer can only claim his own medical expenses. The claim must be made in the calendar year the expense was incurred. Only expenses in excess of a specified amount are eligible for a tax credit. The amount of the tax credit is dependent on the taxpayer's marginal tax rate. --------------------------------------------------------------------------------------------- Question 22 (1 point) Jon Bogen operates a consulting business out of a dedicated space in his home. It is his principal place of business. With respect to the items that he can deduct, which of the following statements is correct? Question 22 options: Jon can only deduct a pro rata share of operating costs and utilities. Jon can only deduct a pro rata share of operating costs, utilities, and property taxes. Jon can only deduct a pro rata share of operating costs, utilities, property taxes, and mortgage interest. Jon can deduct a pro rata share of operating costs, utilities, property taxes, mortgage interest and CCA. ----------------------------------------------------------------------------------------------------------- Question 23 (1 point) Which of the following is NOT a taxable entity for Canadian income tax purposes? Question 23 options: Darklyn Ltd., a Canadian resident corporation. Ms. Sarah Bright, a Canadian resident. Walters and Walters, a group of CPAs operating as a partnership. The Martin family trust. ---------------------------------------------------------------------------------------------------------- Question 24 (1 point) The balance due date for a corporation is: Question 24 options: April 30 of the following year. the same as the filing deadline. three months after the end of the taxation year, or two months after the end of the taxation year if the corporation is a small CCPC. two months after the end of the taxation year, or three months after the end of the taxation year if the corporation is a small CCPC. ------------------------------------------------------------------------------------------------------------- Question 25 (1 point) For corporations, the filing deadline for tax returns is: Question 25 options: April 30. the fiscal year end. three months after the fiscal year end. six months after the fiscal year end. ---------------------------------------------------------------------------------------------------------- Question 26 (1 point) - Indicate which of the following benefits provided by an employer is considered part of employment income. Question 26 options: Subsidized meals provided in employer facilities. Low rent housing. Premiums under private health services plans. Uniforms and special clothing. --------------------------------------------------------------------------------------------------------- Question 27 (1 point) ) An individual who resides in Saskatchewan has not filed her 2017, 2018 and 2019 income tax return because the individual was told that withholdings for source deductions were sufficient and that no tax would be owing for the three years. The individual has since learned that the withholdings for source deductions were excessive and that the individual is entitled to a refund for all three years. The individual files all three income tax returns on September 29, 2022. Refunds will be issued for the following years: Question 27 options: 2017 & 2018 All three years 2019 None of the years ------------------------------------------------------------------------------------------------------------ Question 28 (1 point) Which of the following business expenses is deductible for tax purposes? Question 28 options: $25 late filing penalty charged by CRA. $50 speeding ticket incurred while delivering goods to a customer. $15 late payment interest charged by utility company. $20 late payment interest charged by CRA. ---------------------------------------------------------------------------------------------------------- Question 29 (1 point) Jon Avery starts an unincorporated business on December 1, 2019. Which of the following statements is correct with respect to Jon's taxation year end? Question 29 options: Jon must select December 31 as his taxation year end. Jon must select November 30 as his taxation year end. Jon can choose any date for his year end. However, if Jon chooses a non-calendar year end he will have to adjust his income by an amount referred to as "additional business income". Jon can choose any date for his year end. However, if Jon chooses a non-calendar year end he will have to report income for his first two fiscal years in his 2020 tax return. ---------------------------------------------------------------------------------------------------------- Question 30 (1 point) Vanessa moves to Germany on July 15 of the current year. She is 35 and has lived in Canada all of her life. Which one of the following best indicates Vanessa's Canadian residency status for the current year? Question 30 options: A deemed resident (sojourner) A non-resident A full-time resident A part-year resident ----------------------------------------------------------------------------------------------------------- Question 31 (1 point) In which one of the following lists are ALL items relevant when computing net employment income? Question 31 options: Employee contributions to a registered pension plan; signing bonus on accepting employment; use of an employer-owned automobile. Monthly automobile allowance; dental plan paid for by the employer; promotional cost incurred in selling the employer's products. Subsidized meals in employer's facilities; life insurance paid by the employer; legal fees incurred to collect unpaid salary. Tips and gratuities; dental insurance paid by the employer; exercise of options to purchase shares of the publicly traded employer. --------------------------------------------------------------------------------------------------------- Question 32 (1 point) The capital cost of an asset includes a number of costs. Indicate which cost would NOT be considered part of the capital cost. Question 32 options: Legal fees incurred to acquire the asset. Duties paid on the asset. Fire and theft insurance paid on the asset. Non-refundable provincial sales taxes paid on the asset. ----------------------------------------------------------------------------------------------------------- Question 33 (1 point) Sharon Jarvis contributed $500 to the Federal Liberal Party. She is eligible for a federal political contributions tax credit of . Question 33 options: $450 $350 $500 $475 -------------------------------------------------------------------------------------------------------------- Question 34 (1 point) For tax purposes, the cost of the end of period inventory can be determined in a variety of ways. Which of the following approaches CANNOT be used? Question 34 options: Last-In, First-Out. First-In, First-Out. Specific Identification. Average Cost. ------------------------------------------------------------------------------------------------------------- Question 35 (1 point) A(n) Dora Burch files her 2022 income tax return on March 2, 2023. She receives an original notice of assessment dated June 3, 2023. However, on December 28, 2023, she receives a reassessment indicating that she owes a substantial amount of additional tax. She would like to object to this reassessment. What is the latest date for her to file a notice of objection? She does not carry on a business. (Ignore the effect of leap year if applicable.) ____________________ business sells goods that it purchases in finished form for resale. Question 35 options: March 2, 2024. April 30, 2024. March 28, 2024. December 28, 2024. -------------------------------------------------------------------------------------------------------------- Question 36 (1 point) Which of the following types of taxes is not currently in use by the federal government of Canada? Question 36 options: Excise Taxes Custom Duties Head Tax Transfer Tax --------------------------------------------------------------------------------------------------------------- Question 37 (1 point) Which of the following forms of taxation provides the largest component of federal government taxation revenues? Question 37 options: Personal income tax Corporate income tax Goods and services tax Employment insurance premiums ------------------------------------------------------------------------------------------------------------ Question 38 (1 point) Dora Burch files her 2020 income tax return on April 20, 2021. She receives a nil assessment on June 3, 2021. However, on December 28, 2021, she receives a reassessment indicating that she owes a substantial amount of additional tax. She would like to object to this reassessment. What is the latest date for her to file a notice of objection? (Ignore the effect of leap year if applicable.) Question 38 options: April 20, 2021. April 30, 2022. June 15, 2022. December 28, 2021. ------------------------------------------------------------------------------------------------------------ Question 39 (1 point) Which of the following is an essential factor in determining whether an individual has ceased to be a resident of Canada? Question 39 options: The individual has closed his Canadian savings account. The individual has given up his membership in the Canuck Country Club. The individual has become a resident of another country. The individual has given up his Ontario driver's licence. ----------------------------------------------------------------------------------------------------------- Question 40 (1 point) Adam is self-employed. He might be eligible for all of the following federal tax credits except: Question 40 options: CPP tax credit. EI tax credit. Canada employment tax credit. Canada Workers Benefit tax credit. -------------------------------------------------------------------------------------------------------- Question 41 (1 point) Which of the following statements with respect to allowances is NOT correct? Question 41 options: An allowance from an employer to cover an employee's professional association dues will not be included in an employee's income Reimbursement by an employer of an employee's moving expenses will not be included in an employee's income. Travel allowances provided by an employer are never included in an employee's income. In general, employers prefer allowances to reimbursements. -------------------------------------------------------------------------------------------------------- Question 42 (1 point) Maxine is the proprietor of a home based business. She paid $25,000 to her editorial assistant, $8,000 to her son as her computer technician, and $32,000 to herself as salary. How much can she deduct as a business expense on her income tax return? Question 42 options: Nil. $25,000 $33,000 $65,000 ----------------------------------------------------------------------------------------------------------- Question 43 (1 point) For corporations, the filing deadline for income tax returns is: Question 43 options: April 30. the taxation year end. three months after the taxation year end. six months after the taxation year end. -------------------------------------------------------------------------------------------------------------- Question 44 (1 point) Fred Hopkins has employment income of $45,000, a business income of $14,000, capital gains of $20,000 (50%), capital losses of $12,000 (50%) , and subdivision e deductions of $3,000. Fred's Net Income For Tax Purposes is equal to: Question 44 options: $36,000 $49,000 $63,000 $60,000 ------------------------------------------------------------------------------------------------------------ Question 45 (1 point) Fung Wo purchased vacant land on a remote island off the coast of British Columbia on January 1, 2016 for $50,000. She intended to re-sell it for a profit the next year but due to an oil spill, property values dropped. She was finally able to sell the vacant land for $45,000 on December 31, 2019. In the meantime, she paid property taxes of $500 each year. For 2019 tax purposes, Fung Wo has: Question 45 options: An allowable capital loss of $2,500 An allowable capital loss of $3,500 A net business loss of $5,000 A net business loss of $7,000 ------------------------------------------------------------------------------------------------------------ Question 46 (1 point) Ms. Ali, an individual who carried on a music education business as a sole proprietor, dies on November 15, 2022. What is the latest filing date for her 2021 income tax return? May 15, 2023 or June 15, 2023 Question 46 options: April 30, 2023. May 15, 2023. May 30, 2023. June 15, 2023. -------------------------------------------------------------------------------------------------------------- Question 47 (1 point) Which of the following statements is NOT correct? Question 47 options: If an individual has business income during the year, the due date for filing the income tax return is June 15 of the following currect calendar year. An income tax return may be required of an individual, without regard to their age. If an individual has no taxable income for the year, they never have to file an income tax return. If an individual sells a capital property during the year, they are required to file an income tax return, even if there is no gain or loss on the transaction. --------------------------------------------------------------------------------------------------------------- Question 48 (1 point) Mr. Khan, who carried on a construction business as a sole proprietor, dies on April 1, 2022. What is the latest filing date for his final 2022 income tax return? Question 48 options: April 30, 2023. June 15, 2023. October 1, 2023. December 31, 2023. --------------------------------------------------------------------------------------------------------------- Question 49 (1 point) Providing employees with private health care benefits involves what type of tax planning? Question 49 options: Tax evasion. Tax deferral. Income splitting. Tax avoidance. ------------------------------------------------------------------------------------------------------------ Question 50 (1 point) Mr. Finlay, a retired individual whose only source of income was pension receipts, dies on August 15, 2019. By what date must Mr. Finlay's final tax return be filed? Question 50 options: April 30, 2020. February 28, 2020. February 15, 2020. None of the above.