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

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

29) Mountain Company is a company incorporated in the United States. It employs salespeople who live in Canada but does not have an office or any establishment bearing the company name in Canada. The salespeople visit Canadian customers, who then order from Mountain Company and receive goods directly from the United States. Which of the following best describes the tax status in Canada of Mountain Company?

(a) Mountain Company is not taxable in Canada, because it does not have a permanent establishment in Canada.

(b) Mountain Company is subject to a withholding tax under Part XIII of the IncomeTaxActon its gross revenue in Canada.

(c) Mountain Company is subject to tax only on its Canadian sales because the location of company employees in Canada implies that there is a permanent establishment.

(d) Mountain Company is subject to a withholding tax under Part XIII of the IncomeTaxActon its net income earned in Canada.

30) CBS Inc. is a private corporation incorporated in Canada in 1996. All of its income is derived from sources originating in Australia. All the CBS shareholders reside permanently in the United States, where they make all the major decisions for the company. Which of the following accurately describes CBS's tax status in Canada?

(a) CBS is not a resident of Canada and is taxed in Canada only on income earned from its permanent establishment in Canada.

(b) CBS is a resident of Canada and taxed in Canada on its world income.

(c) CBS is not a resident of Canada and is not subject to tax in Canada.

(d) CBS is not a resident of Canada but is subject to a withholding tax on dividends paid to its shareholders in the United States.

31) Which one of the following would be considered employment income for Canadian income tax purposes for 2022?

(a) Amounts paid by your employer for counselling services in respect of mental and physical health.

(b) A private health services plan premium paid by your employer.

(c) Benefits paid by your employer to a deferred profit sharing plan that does not pay out until 2030.

(d) An all-expense-paid trip to Europe provided to you by a supplier of your company for reaching a sales quota.

32) George moved from Quebec to Ontario in 2022, as a result of a promotion by his employer to open a new branch plant. When he sold his house in Quebec he incurred a loss of $100,000 on the sale. George’s employer decided to reimburse him for the housing loss of $100,000 in 2022. Which of the following amounts represent the increase to George’s employment income in 2022?

(a) No change to employment income

(b) $42,500 added to employment income

(c) $85,000 added to employment income

(d) $100,000 added to employment income