Introduction to Federal Income Taxation in Canada 43rd Edition 2022-2023

Edition by Nathalie Johnstone , Devan Mescall , Julie Robson Test bank Sample

9) ScarpyLtd., a public company and a manufacturer with a December 31 year-end. On January 1, 2022, the undepreciated capital cost for Class 10.1 was $17,850. The Class 10.1 car was purchased in 2020 for $35,000. During 2022, it was sold for $21,000. A new automobile was purchased for $40,680, which included HST of $4,160. ABC Ltd. is registered to collect and remit HST. What is the maximum CCA allowed combined (rounded to the nearest dollar) for the two cars for 2022?

(a) $17,289

(b) $17,978

(c) $19,967

(d) $17,798

10) Jonas Laliberte is a self-employed therapist. He meets with all of his clients in his 400 square foot home office. The entire house has a square footage of 2,400 square feet. Greg incurred the following costs:

What are the total expenses deductible from business income?

(a) $1,000

(b) $1,350

(c) $1,517

(d) $2,350

11) K Corporation Inc., a public company, owns a restaurant business that it carries on in rented premises. The lease was signed January 1, 2021 and expires on December 31, 2026 (six years in total), and has two successive renewal options for two years each. K Corporation Inc. had an opening balance in 2022 in Class 13 of $26,000 that resulted from $32,000 of leasehold improvements made during the 2021 taxation year. K Corp Inc. made an additional $14,000 of leasehold improvements to the same premises during its 2022 taxation year-end which ends December 31, 2022. What is the maximum CCA that K Corp. Inc. can claim in 2022 for its Class 13 assets?

(a) $3,000

(b) $7,000

(c) $6,000

(d) $9,000

12) During the 12-month period ended December 31, 2022 ABC Co., a CCPC, purchased a $40,000 (excluding tax of HST of 13%) passenger vehicle for use by its salesperson in conducting his employment. What is the maximum capital cost allowance that ABC Co. can claim for 2022, assuming that the company is a HST registrant (i.e., the company remits HST)?

(a) $15,300

(b) $38,420

(c) $20,340

(d) $34,000

13) In 2022, Alpha’s employer provided him with an employer-owned automobile costing $33,900 (including HSTof $3,900) for 12 months. His kilometres for personal use were 5,000 out of a total

Introduction to Federal Income Taxation in Canada 43rd Edition 2022-2023

Edition by Nathalie Johnstone , Devan Mescall , Julie Robson Test bank

Sample of 20,000 kilometres. Operating costs paid by his employer during 2022 were $3,503 (including HST of $403). Which one of the following statements is true for 2022?

(a) Alpha’s minimum operating cost benefit is $1,450.

(b) Alpha’s minimum operating cost benefit is $1,017.

(c) Alpha cannot elect to use ½ of his standby charge as his operating cost benefit.

(d) Alpha’s minimum standby charge is $8,136.

14) Kappa Limited, a public company, paid $10,000 to purchase computer application software (before apply HST) on January 31, 2022. Kappa Limited has a December 31 year-end. What is the maximum tax deduction that Kappa Limited can claim in respect of the above expenditure for its taxation year ended December 31, 2022, assuming that Kappa is registered to collect and remit HST?

(a) $8,250

(b) $10,000

(c) $11,300

(d) $15,000

15) Bauer Bikes Ltd. (BBL) sold a warehouse on the waterfront in Waterloo on March 15, 2022. The City of Waterloo purchased the property and intends to demolish the building and use the land as part of a waterfront bicycle trail. The total proceeds paid to BBL were $420,000. The adjusted cost base of the land is $80,000. The capital cost of the building was $90,000 and the UCC of the building was $12,000. BBL has allocated all of the proceeds to the land. What will be the impact on Division B income for BBL for the above sale?

(a) $170,000

(b) $158,000

(c) $164,000

(d) $(12,000)

16) Jamal Ling made a permanent move to London England on August 15 of this year, after having lived in Canada all of his life. Jamal is 22 years old. Which one of the following best indicates Jamal’s residency status for Canadian income tax purposes for this year?

(a) A full-time resident

(b) A part-year resident

(c) A non-resident

(d) A deemed resident (sojourner)

17) Xi Limited was incorporated in Nova Scotia on May 21, 1959. The corporation has never carried on business in Canada, but held its annual directors’ meeting in Nova Scotia each year from 1959 through 1964. Which one of the following best describes Xi Limited’s residency status for Canadian income tax purposes for 2022?

(a) A deemed resident (sojourner)

(b) A full-time resident

(c) A non-resident

(d) A part-time resident

18) Pi has purchased a vacant lot. He hopes that someday, once he meets his future bride and settles down, he will build a home and raise his family on the property. This year, Pi paid $800 of property taxes and $1,000 of interest on the loan he obtained to purchase the lot. Which ONE of the following statements is TRUE?