test bank tax 1 Questions &Answers 2022/2023

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TIF PROBLEM ONE - 2 Introduction - True Or False 1. A value added tax is a tax levied on the increase in value of a commodity or service that has been created by the taxpayer’s stage of the produ... ction or distribution cycle. True or False? 2. A partnership can be a taxable entity for income tax purposes. True or False? 3. A partnership can be a taxable entity for GST purposes. True or False? 4. In general, provincial income taxes are based on a specified percentage of federal tax payable. True or False? 5. The federal government does not collect personal or corporate taxes for Ontario or Quebec. True or False? 6. A sales tax is a regressive tax even when it is applied at a single rate on all transactions. True or False? 7. A major advantage of progressive tax rates is that their use encourages economic growth. True or False? 8. Tax expenditures are less costly to administer than direct funding programs. True or False? 9. Part I of the Income Tax Act is the largest and most important part. True or False? 10. The citation ITA 61(4)(b)(ii) would be read Paragraph 61, Subparagraph 4, Section b, Subsection ii. True or False? 11. An income tax is payable for each taxation year on the Taxable Income of every personresident in Canada at any time in the year. True or False? 12. Any taxpayer can choose the calendar year as their taxation year. True or False? TIF PROBLEM ONE - 3 Introduction - Multiple Choice New For 2016/2017 CanadianTaxSystem 1. Which of the following types of taxes is not currently in use by the federal government of Canada? A. Excise Taxes B. Custom Duties C. Head Tax D. Transfer Tax TaxPolicyConcepts 2. Which of the following statements with respect to Canadian tax policy is NOT correct? A. The economic burden of a particular tax may not fall on the same group that has the legal liability to pay the tax. B. Extremely high rates of tax will always encourage individuals to work harder so that they will have more after tax income. C. The inability to harmonize the GST in some provinces has increased the complexity of tax compliance. D. A progressive tax system is unfair to individuals with incomes that fluctuate significantly from year to year. IncomeTaxReferenceMaterials 3. Which of the following statements with respect to tax reference materials is correct? A. Income Tax Folios are a legislative source of guidance. B. Income Tax Regulations are gradually being replaced by Income Tax Folios. C. Interpretation Bulletins are gradually being replaced by Information Circulars. D. The Income Tax Act is the most important source of information for dealing with matters related to the federal income tax. LiabilityForTax 4. Of the following statements related to liability for Canadian income tax, which statement is NOT correct? A. As used in the Income Tax Act, the term person refers to individuals, trusts, and corporations. B. Corporations must use the calendar year as their taxation year. C. The Canadian Part I tax is assessed on residents of Canada. D. The Canadian Part I tax is assessed Canadian employment income earned by a non-resident. AlternativeConceptsofIncome 5. Which of the following statements with respect to the relationship between accounting Net Income and Net Income For Tax Purposes is NOT correct? A. Both accounting Net Income and Net Income For Tax Purposes value many assets at their historical cost. B. Accounting Net Income requires that costs be matched with revenues. C. Net Income For Tax Purposes requires that costs be matched with revenues. D. Accounting Net Income is determined by applying Generally Accepted Accounting Principles. CalculationOfNetIncomeForTaxPurposes 6. With respect to the determination of Net Income For Tax Purposes, which of the following statements is correct? A. Property losses are deducted from business income before the deduction of RRSP contributions. B. Allowable capital losses can be deducted to the extent of other positive sources of income. C. If not used during the current period, all subdivision e deductions can be carried forward to subsequent periods. D. If a business loss exceeds all other positive sources of income, Net Income For Tax Purposes is equal to nil. NetIncometoTaxableIncome 7. Which of the following items would be deducted in converting Net Income For Tax Purposes to Taxable Income? A. A deduction for spousal support payments made during the year. B. A deduction for the extra costs related to living in prescribed areas of the Canadian north. C. Current year allowable capital losses in excess of current year taxable capital gains. D. Current year business losses in excess of other positive sources of income. TaxPlanning 8. Which of the following items does not result in tax avoidance? A. Use of the lifetime capital gains deduction. B. Employer contributions to group disability plans. C. Employer contributions to private health care plans. D. Accelerated depreciation (CCA) on rental properties. Retained From Previous Editions CanadianTaxSystem 9. Which of the following is NOT a taxable entity for Canadian income tax purposes? A. Darklyn Ltd., a Canadian resident corporation. B. Ms. Sarah Bright, a Canadian resident. C. Walters and Walters, a group of CPAs operating as a partnership. D. The Martin family trust. 10. Which of the following could be required to file a GST return? A. Chan’s Clothing Store (an unincorporated business) B. The Chan Foundation (a registered charity) C. Min Chan (an individual) D. All of the above could be required to file a GST return. 11. Which of the following forms of taxation provides the largest component of federal government taxation revenues? A. Personal income tax B. Corporate income tax C. Goods and services tax D. Employment insurance premiums 12. With respect to provincial income taxes, other than those assessed in Quebec, which ofthe following statements is NOT correct? A. Each province can apply different rates to as many brackets for individuals as it wishes. B. The federal government collects the provincial income tax for individuals for every province except Quebec. C. Each province can establish its own tax credits to apply against Tax Payable for individuals. D. Each province can establish rules for determining the Taxable Income of individuals. 13. Which of the following groups of entities are all subject to taxation on income? A. Individuals, proprietorships and corporations B. Proprietorships, corporations and trusts C. Individuals, trusts and corporations D. Individuals, partnerships and corporations 14. Income tax is calculated for which of the following groups of jurisdictions? A. Municipal, provincial, and federal B. Provincial, federal, and international C. Municipal, federal, and international D. Municipal, provincial, and international TaxPolicyConcepts 15. Which of the following goals is NOT a current economic policy objective of the Canadian tax system? A. Ensure the continued provision of public goods B. Redistribute income and wealth among taxpayers C. Ensure fairness in the allocation of resources to different levels of government. D. Economic stabilization such as stimulating the economy or creating jobs. 16. Which of the following can be considered an advantage of an income tax system based onprogressive rates? A. A progressive rate system is simpler to administer. B. A progressive rate system provides greater stability in the context of changing economic conditions. C. A progressive system discourages tax evasion. D. A progressive system encourages greater effort on the part of individuals. 17. Which of the following statements accurately describes a regressive tax? A. A tax which results in higher effective tax rates for higher income taxpayers. B. A tax which results in lower effective tax rates for higher income taxpayers. C. A tax in which the same effective rate applies to all levels of income. D. A tax that is shifted to consumers through price increases on the goods purchased. 18. Which of the following statements with respect to using tax expenditures rather than program spending is NOT correct? A. It is more costly to administer tax expenditures as opposed to program spending. B. Tax expenditures reduce the visibility of government actions. C. Tax expenditures leave fewer decisions in the hands of the private sector, thereby providing for more efficient allocation of resources. D. Tax expenditures reduce the impact of progressive rates on higher income taxpayers. 19. Which of the following would NOT be considered a desirable characteristic of a tax system? A. Balance between sectors. B. Inelasticity. C. Neutrality. D. Flexibility. 20. Which of the following would be considered a desirable characteristic of an effective taxsystem? A. Inelasticity. B. Lack of international competitiveness. C. Simplicity. D. Ambiguity. 21. "We should not have a tax system which encourages investment in particular assets or inspecific areas of the country." This statement reflects which of the following qualitative characteristics of an effective tax system? A. Neutrality. B. Horizontal equity. C. Simplicity. D. Elasticity. 22. "Taxpayers who earn $100,000 in dividends should pay the same amount of tax as taxpayers who earn $100,000 in capital gains." This statement reflects which of the following qualitative characteristics of an effective tax system? A. Vertical equity. B. Neutrality. C. Elasticity. [Show More]

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