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This 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
(D) $nil
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