Question

Question 2 Qui Limited was incorporated in Nova Scotia on May 21, 1936. The corporation has never carried on business in Canada, but held its annual directors' meeting in Nova Scotia each year from 1936 through 1966. Which one of the following best describes Qui Limited's residency status for Canadian income tax purposes for 2018? Question 2 options:

1) A full-time resident

2) A part-time resident

3) A deemed resident (sojourner)

4) A non-resident

Question 3 Which of the following statements about the ITA and related procedures is correct? Question 3 options:

1) There is no statutory definition of the word "income" in the ITA.

2) Courts always make decisions based on GAAP.

3) In tax matters, CRA always has the burden of proving that an assessment is incorrect.

4) An appeal in the Federal Court of Appeal must be made within 60 days from the date of the Tax Court of Canada decision.

Question 4 An overloaded external auditor takes home the audit work related to a client's taxation. Due to time pressure, the auditor asks her husband, who is an accountant too but working for another company, to help her in completing the working papers. Which of the following best describes your assessment of the auditor's action? Question 4 options:

1) This is acceptable because her husband is not working for her client.

2) She has most likely violated Canadian Auditing Standards (CAS) only.

3) She has most likely violated the CPA-Alberta Rules of Professional Conduct only.

4) She has most likely violated both CPA-Alberta Rules of Professional Conduct and CAS.

Question 5 Individuals must file their income tax returns: Question 5 options:

1) On a quarterly basis if self employed or spouse is self-employed.

2) June 15 if self-employed or spouse is self-employed.

3) If an individual's date of death is December 15, by April 30 of the following calendar year.

4) If an individual's date of death is November 15, by April 30 of the following calendar year.

Question 6 In citing the general restriction on expenses against business or property income, you would refer to: Question 6 options:

1) Subsection 18(1)a)

2) Subparagraph 18(1)a)

3) Paragraph 18(1)a)

4) Clause 18(1)a)

Question 7 Ontario Manufacturing Company is a company incorporated in the United States. It employs salespeople who live in Canada but does not have an office or any establishment bearing the company name in Canada. The salespeople visit Canadian customers, who then order from Ontario Manufacturing Company and receive goods directly from the United States. Which of the following best describes the tax status in Canada of Ontario Manufacturing Company? Question 7 options:

1) Ontario Manufacturing Company is not taxable in Canada, because it does not have a permanent establishment in Canada.

2) Ontario Manufacturing Company is subject to a withholding tax under Part XIII of the Income Tax Act on its gross revenue in Canada.

3) Ontario Manufacturing Company is subject to tax only on its Canadian sales because the location of company employees in Canada implies that there is a permanent establishment.

4) Ontario Manufacturing Company is subject to a withholding tax under Part XIII of the Income Tax Act on its net income earned in Canada.

Question 8 Amy lives in Detroit, Michigan, USA. She commutes daily to Windsor, Ontario, Canada, where she is employed by Ford Motor Company of Canada Limited. She works 9 am to 5 pm, Monday through Friday. Which one of the following best indicates Amy's residency status for Canadian income tax purposes for 2018? Question 8 options:

1) A full-time resident

2) A part-year resident

3) A deemed resident (sojourner)

4) A non-resident

Question 9 An auditor reviewing ABC Corporation discovered that $100,000 of corporate revenue was being deliberately recorded in the books as a debit to Bank and a credit to shareholders loan. Which of the following statements is true? Question 9 options:

1) This transaction is an example of tax avoidance.

2) This transaction is an example of tax planning.

3) This transaction does not fit any the above categories.

4) This transaction is an example of tax evasion.

Question 10 ABC Inc. is a private corporation incorporated in Canada in 1991. All of its income is derived from sources originating in New Zealand. All the ABC shareholders reside permanently in the United States, where they make all the major decisions for the company. Which of the following accurately describes ABC's tax status in Canada? Question 10 options: 1) ABC is not a resident of Canada and is taxed in Canada only on income earned from its permanent establishment in Canada.

2) ABC is a resident of Canada and taxed in Canada on its world income.

3) ABC is not a resident of Canada and is not subject to tax in Canada.

4) ABC is not a resident of Canada but is subject to a withholding tax on dividends paid to its shareholders in the United States.

Answer 1

Answer1: non resident (never carried on business in Canada)

Answer2:An appeal in the Federal Court of Appeal must be made within 60 days from the date of the Tax Court of Canada decision(the tax court allowed the appeal, but this decision was overturned on further appeal by the minister to the federal court od appeal)

Answer3:She has most likely violated Canadian Auditing Standards (CAS) only(this opinion is given in accordance with auditing standards that require the auditors to plan certain procedures and report on the results of the audit)

Answer4:June 15 if self-employed or spouse is self-employed(if your are selfemployed ,the deadline for filing your return is june 15).

Answer5:Clause 18(1)a)

Answer6:Ontario Manufacturing Company is not taxable in Canada, because it does not have a permanent establishment in Canada

Answer7:A deemed resident( you did not have resident ties in canada (otherwise a non resident),but you temporarily stayed in canada for 183 days or more in the next year).

Answer8:This transaction is an example of tax avoidance(tax avoidance is the legal usage of the tax regime in a single territory to one's own advantage to reduce the amount of tax that is payable by mean that are with in the law).

Answer9:ABC is not a resident of Canada but is subject to a withholding tax on dividends paid to its shareholders in the United States.(ABC shareholders reside permanently in the United States ,all major decision they take).