Question 1

List three factors that would be considered in the determination of whether or not an individual is a resident of Canada.

Accepted Answer

The main factors here would be:
• Does the individual have a dwelling in Canada?
• Does the individual's spouse or common-law partner live in Canada?
• Do the dependants of the individual live in Canada? Other factors that could be mentioned include:
• Owning personal property in Canada (such as furniture, clothing, automobiles, and recreational vehicles).
• Social ties with Canada (such as memberships in Canadian recreational and religious organizations).
• Economic ties with Canada (such as employment with a Canadian employer and active involvement in a Canadian business, and Canadian bank accounts, retirement savings plans, credit cards, and securities accounts).
• Hospitalization and medical insurance coverage from a province or territory of Canada.
• A driver's license from a province or territory of Canada.
• A vehicle registered in a province or territory of Canada.
• A seasonal dwelling place in Canada or a leased dwelling place.
• Holding a Canadian passport.
• Membership in Canadian unions or professional organizations.

Question 2

What is the meaning of "person" when the term is used in the Income Tax Act?

Accepted Answer

In the Income Tax Act, the term "person" can refer to an individual, a corporation, or a trust.

Question 3

The major source of federal revenues is the personal income tax. Indicate three other types of taxes that contribute to federal revenues.

Accepted Answer

The other sources of federal revenues that are shown in Figure 1-1 of the text are:
• Corporate income taxes.
• Non-resident income taxes.
• GST.
• Customs and import duties.
• Other excise taxes.
• EI premiums.

Question 4

If an individual leaves Canada for a temporary absence, this raises the question of whether he was a Canadian resident during the period of absence, particularly if some residential ties have been retained. What are the major factors that are considered in determining whether an individual continues to be a Canadian resident during a temporary absence?

Accepted Answer

The answer of If an individual leaves Canada for a...

Question 5

What purposes are served by Canada's international tax treaties?

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The answer of What purposes are served by Canada's international...

Question 6

Under what circumstances will a person who is not resident in Canada be required to pay Canadian income taxes?

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Question 7

When an individual leaves Canada, the CRA may take the position that he has retained his residence status. What are the primary factors that the CRA will consider in determining whether such an individual has, in fact, ceased to be a Canadian resident?

Accepted Answer

The answer of When an individual leaves Canada, the CRA...

Question 8

While the Sections of the Income Tax Act are numbered 1 through 260, there are actually more than 260 Sections. Explain why this is the case.

Accepted Answer

The answer of While the Sections of the Income Tax...

Question 9

What is the importance of residence in Canadian income taxation?

Accepted Answer

The answer of What is the importance of residence in...

Question 10

Distinguish between horizontal equity and vertical equity as these terms are used in describing tax systems.

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Question 11

What is the meaning of "taxation year" as the phrase is used in the Income Tax Act?

Accepted Answer

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Question 12

A regressive tax is one that taxes high income individuals at lower effective rates. Explain why a sales tax levied at a flat rate of 8 percent can be regressive.

Accepted Answer

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Question 13

One of your friends is leaving Canada and would like to know when he will no longer be considered a Canadian resident. Briefly explain the rules related to terminating an individual's status as a Canadian resident.

Accepted Answer

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Question 14

What are some of the factors that have led to the entrenched use of tax expenditures as opposed to program spending?

Accepted Answer

The answer of What are some of the factors that...

Question 15

Indicate three disadvantages of a tax system that uses progressive rates.

Accepted Answer

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Question 16

Provide an example of how taxation policy can be used to influence resource allocation.

Accepted Answer

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Question 17

The Canadian income tax system is often used to achieve various economic objectives. Give three examples that illustrate this point.

Accepted Answer

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Question 18

The government pays a Canada Child Benefit to the parents of children who are under 18 years of age. The payments are reduced by a percentage of income in excess of a specified level. What objectives are achieved by this benefit system?

Accepted Answer

The answer of The government pays a Canada Child Benefit...

Question 19

List four non-legislative sources of income tax information.

Accepted Answer

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Question 20

Briefly describe the procedures used in calculating provincial income taxes for individuals in provinces other than Quebec.

Accepted Answer

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Quiz 1: Introduction to Federal Taxation in Canada