Question 1

Ms.Deveco's 2011 income tax return is due on April 30, 2012 While she is too busy to file her tax return on that date, she remits a check to the government for $10,000, her esti- mated amount of net tax owing on that date.She has never filed a late return before.She prepares and files her tax return on May 31, 2012.At this time, the return shows that her actual net tax owing was $9,800.Assuming that the interest rate applicable to late pay- ment of taxes is one-half percent per month without daily compounding, how much will she owe in penalties and interest on the late filing?

Accepted Answer

Ms. Deveco remitted a check for $10,000 on April 30, which covers her estimated net tax owing. Therefore, there is no late payment penalty. She filed her tax return one month late on May 31, but her actual net tax owing is lower than her estimated amount. This means that she will receive a refund of $200 ($10,000 - $9,800) from the government. Since she is entitled to a refund, there is no late-filing penalty or interest charges.

Question 2

Under what circumstances is an individual entitled to a home relocation loan deduction?
How is the amount of the deduction calculated?

Accepted Answer

There is no specific "home relocation loan deduction" in the U.S. tax code. Deductions related to moving expenses were eliminated for most taxpayers starting in 2018, except for active-duty military members.

Question 3

For corporations, the filing deadline for tax returns is:

Accepted Answer

For corporations, the filing deadline for tax returns is six months after the fiscal year end.

Question 4

Ms.Loren dies on February 1, 2012.All of her income is from employment activities and she does not have a spouse or common-law partner.What is the latest date for filing her 2011 income tax return?

Accepted Answer

When a taxpayer dies, the due date for filing their final tax return is generally six months after the date of death. Since Ms. Loren died on February 1, 2012, her 2011 tax return would be due on August 1, 2012.

Question 5

Briefly explain the difference between a tax deduction and a tax credit.

Accepted Answer

The statement is not a question that can be answered with true or false. However, a tax deduction reduces taxable income, while a tax credit directly reduces the amount of tax owed.

Question 6

John Barron is self-employed and plans to file his 2011 tax return on June 15, 2012.His balance-due day is:

Accepted Answer

For self-employed individuals in Canada, the tax return filing deadline is June 15 of the following year, but any taxes owed are due by April 30 of the following year. Therefore, the balance-due day for John Barron's 2011 tax return is April 30, 2012.

Question 7

For a public corporation, which of the following statements is true with respect to filing a notice of objection?

Accepted Answer

The answer of For a public corporation, which of the...

Question 8

For its 2011 taxation year, its first year of operation, PS Swim Inc.filed its return three months late.The unpaid tax at the due date for the return was $2,500.This amount was not paid until the return was filed.What would its penalty be?

Accepted Answer

The answer of For its 2011 taxation year, its first...

Question 9

A Canadian public corporation had federal taxes payable in 2009 and 2010 exceeding $3,000.One correct option it has with respect to its 2011 instalments is to pay:

Accepted Answer

A Canadian public corporation with federal taxes payable exceeding $3,000 in the previous two years must make monthly instalments based on its estimated taxes for the current year.

Question 10

Explain briefly the rules for determining which province will assess an individual for in- come taxes.From the point of view of tax planning, is the province in which an individual is taxed an important issue?

Accepted Answer

The rules for determining which province will assess an individual for income taxes are based on the individual's residence on December 31st of the taxation year. If an individual has moved between provinces during the year, it is necessary to consider the tie-breaker rules outlined in the federal Income Tax Act to determine which province has primary taxation authority.

From the point of view of tax planning, the province in which an individual is taxed is an important issue as it will impact the amount of tax owed and the types of deductions and credits available. Different provinces may also have different tax rates and tax brackets, which can have a significant impact on an individual's overall tax liability.

Question 11

Tom Arnold filed his 2011 tax return on March 1, 2012.The CRA mailed a notice of as- sessment to Tom dated May 15, 2012, and Tom received it on May 30, 2012.If Tom disagrees with the notice of assessment, he has until which one of the following dates to file a notice of objection?

Accepted Answer

The answer of Tom Arnold filed his 2011 tax return...

Question 12

Mr.Finlay, a retired individual whose only source of income was pension receipts, dies on August 15, 2011.By what date must Mr.Finlay's final tax return be filed?

Accepted Answer

According to the Canadian Revenue Agency, if an individual dies, their final tax return must be filed no later than April 30 of the year following their death, unless the death occurred between November 1 and December 31, in which case the due date is six months after the date of death. In this case, Mr. Finlay's death occurred on August 15, 2011, so the final tax return would be due on April 30, 2012.

Question 13

Jason Marks has to pay his tax by instalments as a result of his significant investment in- come.His net tax owing in 2009 was $13,600.In 2010, it was $15,000.His estimate for 2011 is $17,000.If he decides to pay his 2011 tax instalments according to the prior year option, how much should he pay on September 15, 2011?

Accepted Answer

The prior-year option allows Jason to base his tax instalments for 2011 on the previous year's net tax owing, as long as his income and deductions are similar. Since Jason's net tax owing was $15,000 in 2010, he can use that as the basis for his 2011 instalments.

To calculate the September 15 instalment, he needs to pay one quarter of his estimated 2011 tax owing, which is $17,000.

Thus, the amount Jason should pay on September 15, 2011, is $17,000 x 0.25 = $4,250.

Therefore, the answer is B) $4,250.

Question 14

For the 2011 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?

Accepted Answer

John must file a tax return on or before June 15, 2012, because he had a taxable capital gain of $45,000, even though his net business loss of $45,000 resulted in a Taxable Income of nil.

Question 15

Larry Short has self-employment income of $62,000 in 2011.Prior to this year, he was employed full-time and his employer's withholdings more than covered his tax liability for the year.Larry estimates that, based on his self-employment income, his net tax owing for 2011 will be $8,000.Which of the following statements is true?

Accepted Answer

The answer of Larry Short has self-employment income of $62,000...

Question 16

PS Swim Inc.has a year end of November 30.For its 2011 taxation year, its income tax re- turn is due on:

Accepted Answer

The answer of PS Swim Inc.has a year end of...

Question 17

PP Ltd., a client of your firm, has a November 30th year end and has requested you to ad- vise them on what its monthly instalments for the 2011 tax year will be.Its taxes payable for its November 30, 2009 and November 30, 2010 years were $13,800 and $13,200, re- spectively.Its estimated taxes payable for the November 30, 2011 year are $14,400.PP Ltd.wants to pay the lowest amount possible, without incurring interest penalties.What would its instalments be?

Accepted Answer

PP Ltd. can base its instalments on the lower of the previous year's taxes payable ($13,200) or the estimated current year's taxes payable ($14,400). Twelve payments of $1,100 per month would total $13,200, which is the lowest amount possible without incurring interest penalties.

Question 18

All of the following people will have to pay tax by instalments this year, except:

Accepted Answer

The answer of All of the following people will have...

Question 19

Minnie Belanger is retired.She mailed her 2011 tax return on March 5, 2012.She re- ceived a portion of the tax refund claimed and an assessment notice, dated April 19, 2012, which set out the difference between the amount claimed and the amount of the re- fund.As Minnie disagrees with the notice of assessment, she wishes to file a notice of objection.By which of the following dates must she file her notice of objection?

Accepted Answer

A notice of objection must be filed within 90 days from the date of the notice of assessment. In this case, the assessment notice was dated April 19, 2012, so Minnie Belanger must file her notice of objection by April 30, 2013.

Question 20

Ms.Marston has net tax owing for 2009 of $4,500, net tax owing for 2010 of $8,000, and net tax owing for 2011 of $7,500.If she wishes to pay the minimum total amount of instal- ments for the 2011 taxation year, her first payment on March 15 will be for what amount?

Accepted Answer

To calculate the minimum total amount of instalments for the 2011 taxation year, Ms.Marston needs to take the net tax owed for the previous year and pay either 75% (if her net income for the previous year was less than $30,000) or 50% (if her net income for the previous year was more than $30,000) of that amount in installments throughout the year.

For 2009:
75% of $4,500 = $3,375 (less than $30,000)
For 2010:
50% of $8,000 = $4,000 (more than $30,000)
For 2011:
Ms.Marston needs to pay at least 50% of $7,500 = $3,750

To find out the amount of the first payment due on March 15, she needs to add up the required instalments for the year and divide by the number of payments due (4 in this case):

($3,375 + $4,000 + $3,750) / 4 = $2,781.25

However, the first payment is always slightly less than the others (since it is due mid-March instead of mid-April), so she should pay 25% of this amount:

$2,781.25 x 0.25 = $695.31 (rounded to the nearest dollar)

Therefore, the first payment due on March 15 should be for $1,875.

Quiz 1: Byrd Chens Canadian Tax Principles

Under what circumstances is an individual entitled to a home relocation loan deduction? How is the amount of the deduction calculated?