Stuvia.com - The Marketplace to Buy and Sell your Study MaterialThis file includes all the MCQ Questions by Chapter. It includes the Dynamic questions as well as those

Stuvia.com - The Marketplace to Buy and Sell your Study MaterialThis file includes all the MCQ Questions by Chapter. It includes the Dynamic questions as well as those that are theory based. Solutions are in a separate file.These are practice MCQs that can be shared with the students should you desire to share some practice questions. They can be shared either through Moodle access or through the word documents provided on the instructor resource site.Chapter 2 Question 1 XLtd. is acorporation whichhas always been managed by the same Board of Directors. The Board ofDirectors has alwaysmetwhere the directors reside. Based on these facts,X Ltd. will NOT be resident in Canada for income tax

purposes if X Ltd. was:

(A)incorporated in Canada in 1968 and its directors are all U.S. residents; (B)incorporated in the U.S. in 1970 and its directors are all U.S. residents; (C)incorporated in the U.S. in 1968 and its directors are all Canadian residents; (D)incorporated in Canada in 1964 and itsdirectors are all Canadian residents.Question 2 Joe is legally separated from his wife and has two adult children who live with his wife and are not dependent on him for support. Joe is leaving Canada to take a job in Germany on June 30 of this year. He plans to stay in Germany indefinitely and has purchased a home there. Which one of the following things is the mostimportantfor Joe to do to help ensure that heisnotaresident of Canada for Canadian income tax purposes after he leaves?

(A)Take his wife and children with him to Germany.(B)Give up his Canadian citizenship.(C)Sell his Canadian home or rent it under a long-term lease.(D)Put all his household furniture and personal effects into storage in Canada.Question 3 (dynamic) Mr. Ng is not a resident of Canada. In the year, he had worldwide income of $250,000, including $70,000 of employment income earned in Canada (from director’s fees) and $20,000 of interest on Government of Canada bonds. What amount of taxable income must Mr. Ng report on his Canadian personal income tax return for the year?

(A)$20,000

(B)$70,000

(C)$90,000

(D)$250,000

Question 4 (dynamic) Jay ceased to be a resident of Canada on April 30 of the year and moved to New Zealand on that date.During the first four months of the year, he earned $ 25,000 of employment income in Canada and $ 1,000 of interest income from his bank accounts in Canada. While living in New Zealand during the remainder of the year, he earned $ 30,000 (Cdn. $) of employment income in New Zealand and received $2,000 of interest income from his Canadian bank accounts.

What amount of taxable income must Jay report on his Canadian personal income tax return for the year?

(A)$58,000

(B)$56,000

(C)$26,000

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Question 5 Mr. A was born in Canada and has lived in Canada all of his life. On November 1st of the current year, he was transferred by his employer to Brussels, Belgium. There is no plan for him to return to Canada in the foreseeable future. He is not married and has no children. For the current year, Mr. A’s Canadian residence

status for tax purposes is most accurately described as:

(A) non-resident.(B) resident by virtue of common-law.(C) deemed resident.(D) part-time resident.

Question 6 Mrs. Bee was born in Florence, Italy. She was married for several years to Mr. Cee and resided with him in the family home in Waterloo, Ontario, Canada. Three years ago, Mrs. Bee and Mr. Cee were divorced and she moved back to Florence at that time, where she continues to reside and own a home. During the current year, Mrs. Bee spent the full months of February through April and the full months of August through November in Canada, assisting a friend of hers who was ill. She resided at the friend’s home during her time in Canada. Mrs. Bee’s Canadian residence status for tax purposes, under the provisions of the Income Tax Act,

for the current year is most accurately described as:

(A) non-resident.(B) resident by virtue of common law.(C) deemed resident.(D) part-time resident.

Question 7 Miss Dey is employed by an engineering consulting firm, with its head office in Mississauga, Ontario, Canada. She rents an apartment near her employer’s office. She is single and has no children. During the current year, Miss Dey’s employer asked her to take on a project for the company in Alaska, USA. She moved to Alaska on February 1st. She is uncertain when she will be moving back to Mississauga, but it will be some time prior to the end of next year. She is maintaining her apartment and has sublet it to a friend. Miss Dey’s Canadian residence status for tax purposes, under the provisions of the Income Tax Act, for the current year

is most accurately described as:

(A) non-resident.(B) resident by virtue of common law.(C) deemed resident.(D) part-time resident.

Question 8 Mr. E moved from Buffalo, New York, USA to Vancouver, British Columbia, Canada on May 27th of the current year. He commenced employment in Canada on May 28th. He lived in a hotel until he took possession of his new home in Vancouver on June 1st. His wife and children accompanied him to Canada at the end of the school year in June. Mr. E had no income from Canadian sources prior to moving to Canada. For the

current year, Mr. E is taxable in Canada on:

(A) his Canadian source employment income from May 28th to the end of the year.(B) his Canadian source income from all sources from May 28th to the end of the year.(C) his worldwide income from all sources from May 28th to the end of the year.(D) his worldwide income from all sources for the entire year.

Question 9 Corporation F was incorporated in Edmonton, Alberta ten years ago. The corporation has never carried on business in Canada and the Board of Directors all reside outside of Canada and hold Board of Director’s meetings in Las Vegas, Nevada, USA. The Canadian residence status of F, under the provisions of the Income

Tax Act, is best described as:

(A) deemed resident by virtue of incorporation. Stuvia.com - The Marketplace to Buy and Sell your Study Material

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(B) deemed resident by virtue of common law.(C) part-time resident.(D) non-resident.

Question 10 Gee Limited was incorporated in Raleigh, North Carolina, USA in 1959. Its head office is located in North Carolina. Gee Limited is 100% owned by a company incorporated in Canada. Gee Limited’s Board of Directors does have some individuals who are resident in Canada, but all management decisions related to Gee Limited are made by a management group at the head office in North Carolina. Meetings of the Board of Directors are held in North Carolina. The Canadian residence status of Gee Limited, for the current year, under the

provisions of the Income Tax Act, is best described as:

(A) deemed resident by virtue of incorporation.(B) deemed resident by virtue of common law.(C) part-time resident.(D) non-resident.

Question 11 Inwhichof the following situationsis the person considereda non-resident of Canada for Canadian income tax purposes in the year in question?

(A) James Hill, a 25-year-old engineer living in Ottawa, accepted a six-month transfer to an office in London, England for the period July 1 to December 31, of the year in question. He returned to Canada in the following year. James is not married and has always lived at his parents’ house in Ottawa.

(B) Judy Gordon, a financial analyst, lives in a house she owns in London, England. She had lived in Toronto all her life, until she started a minimum three-year contract with CS Services Inc., which started in July of the year in question. Judy is single and terminated the lease on her apartment in Toronto before moving her belongings to England when her position started in July.

(C) ERT Limited was incorporated in Canada in 1987 1988 and, untilrecently, its manufacturing plant was located in Ontario. In June of the year in question, it moved all of its operations, including the manufacturing plant, to Mexico.

(D) Doug Stewart, a member of the Canadian Armed Forces, has been stationed in Germany for the last

• years, including the year in question. Doug was born in Canada and lived in Canada prior to moving to

Germany.

Chapter 3 Question 1 (dynamic) This year, Bob’s employer provided him with an employer-owned automobile costing $55,000 (including HST) for 12 months. His kilometres for personal use were 14,000 out of a total of 19,000 kilometres. Operating costs paid by his employer during this year were $ 3,700 (including HST). Which one of the following statements is TRUE for this year?

(A) Bob’s standby charge is $13,200 (B) Bob’s minimum operating cost benefit is $2,726 (C) Bob’s minimum operating cost benefit is $6,600 (D) Bob can elect to use 1/2 of his standby charge as his operating cost benefit

Question 2 (dynamic) Stuvia.com - The Marketplace to Buy and Sell your Study Material

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This year, Mary earned a $ 50,000 annual salary as a computer repair person and received a total yearly car allowance of $3,500. The car allowance was paid to her monthly and was not based on the number of kilometres

that she drove. Her employment-related expenses (all reasonable) were:

Automobile expenses (gas, parking, CCA) $3,000 Entertainment $2,000 What is Mary’s minimum employment income for the year?

(A) $53,500

(B) $50,500

(C) $49.500

(D) $49,000

Question 3(dynamic) Susanne Denholm is employed as a provincial payroll tax auditor and is required by contract to maintain an office in her home. Susanne works at home most of the time and has been provided with a laptop computer and a fireproof audit bag for her files. She has not been provided with any reimbursement or allowance in connection with her home office, which occupies 10% of the square footage of her home. She incurred the

following costs to maintain her entire home this year:

Telephone (general line)* $ 600 House insurance 2,000 Property taxes 4,000 Heat, hydro, & maintenance 5,000 Mortgage interest 24,000

• Susanne estimates that she used her telephone 50% for employment purposes during the year.

What is the maximum amount that Susanne can claim for the costs she has incurred in respect of her home office?

(A) $ 500

(B) $ 1,100

(C) $ 1,400

(D) $ 3,800

Question 4 (dynamic) On April 1, 20192020, E Ltd. made a loan of $100,000 to Mr. Walker, a new employee of the corporation, to assist him in purchasing a residence when he moved from Quebec to commence employment in British Columbia. The loan bears interest at 2%, which is to be paid monthly. The principal of the loan is to be repaid in full on April 1, 20282029. The prescribed interest rate on April 1, 20192020, was 4%. Assuming that the prescribed interest rate throughout 2022 2023 was 3% and only the interest owing on the loan is paid each month, which one of the following amounts represents the increase in Mr. Walker’s employment income in 2022 2023 due to the loan.?

(A) $ 1.,000

(B) $ 2,000

(C) $ 3,000

(D) $ 4,000

Question 5 (dynamic) Tanya, an employee of a Canadian public company, received an option to purchase 1,000 common shares of her employer at $30 per share in April 20222023, when the shares were worth $19 per share. In December 20222023, when the fair market value was $40 per share, she exercised her options. In January 20232024, she Stuvia.com - The Marketplace to Buy and Sell your Study Material

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