Question

1. Which of the following statements describes the treatment of losses in the aggregating formula?

Multiple Choice

• All losses, in all sections, are deductible against all sources of income.

• All losses are included in section 3(d).

• Losses in section 3(d) are deductible against all sources of income.

• Losses in section 3(b) are deductible against all sources of income.

2. Which of the following activities would not be considered a source of business income for an individual?

Multiple Choice

• Cutting the neighbours' lawns.

• Renting out the basement apartment of one's house.

• Watching over the neighbour’s pet while the neighbour is on vacation.

• Teaching piano to students, on a part-time basis.

3. Generally, income is considered passive if it is realized from…

Multiple Choice

• Employment

• Business

• Property

• Capital gains

4. Which of the following factors is not relevant when the courts determine if an individual is a resident of Canada?

Multiple Choice

• Their Canadian citizenship status.

• The amount of time spent in Canada on a regular basis.

• Their social and financial ties to Canada.

• Their motivation for being in Canada.

Note- introduction to taxation

Answer 1

1). The correct answer is Option (3).

In the aggregating formula, the losses in section3(d) are the last part or section of this formula and these are adjusted or deductible against all sources of income.

Option (1) is incorrect as the losses for revenue losses can be adjsuted from ordinary gain and capital losses can be adjsuted from capital gains.Option (2) is incorrect as not all the losses are included in section 3(d). Capital losses are included in section 3 (b).Option (4) is incorrect as Losses in section 3(b) are deductible against only from capital gains not all the sources of income.

2). The correct answer is Option (2).

Renting out the basement apartment of one's house is not be considered as a source of business income as Business Income must be taxable.

3). The correct answer is Option (3).

Property income is considered as passive income as it would require very less amount of efforts of a proprietor. Rest of the Options require great efforts, time and labour. So, it will not be considered in passive Income.

4). The correct answer is Option (1).

Their Canadian citizenship status is one of the factors which is not relevant in determining the residensy of Canada. As because the person living abroad can be the citizen of Canada.The amount of time spent in Canada on a regular basis,their social and financial ties to Canada, their motivation for being in Canada all are considered while determining thhe resident.