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

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

33) Bill is the president and CEO of Connection Ltd. Connection Ltd.'s main business is to provide motivational speeches to encourage higher productivity for its corporate clients. Bill takes his wife, Mary, to Paris on a three-day convention on motivational speeches. Mary represents Connection Ltd. at the convention, and hands out brochures and gives a talk on motivational speeches, but she is not an employee of Bill's company. Which of the following statements is true for 2022?

(a) The cost of the hotel for Bill's wife would be added to Bill's employment income because she is not an employee of the company; thus, a personal benefit was received.

(b) Fifty per cent of the trip's cost for Mary would be added to Bill's employment income because she is not an employee of the company.

(c) The cost of the trip for Mary would be added to her personal tax return as employment income even though she is not a regular employee of the company.

(d) No employee benefits will be added to either Bill's or Mary's income since Mary was primarily engaged in business activities on behalf of Connection Ltd.

34) Wajeeha is given the choice in the calendar year of 2022 to receive a pay raise, either as a salary increase of $7,200 or as a benefit of a company leased car that will cost her employer $600 per month to rent, including HST. Wajeehahas come to you for advice so that she can minimize her employment income and thereby minimize her taxes. Which of the following statements is true?

(a) She should be indifferent between the two choices.

(b) She should accept the salary as it will result in lower employment income and a lower tax payable

(c) She should accept the leased automobile as it will result in lower employment income and a lower tax payable.

(d) She should ask her employer to lease a cheaper car and then pay the difference between the monthly leasing costs as part of her salary.

35) Narith operates a small consulting business from his home. The office in his home is his principal place of business. Which of the following correctly describes the home office expenses that can be deducted for tax purposes for 2022?

(a) He can only deduct property taxes, utilities, and repairs.

(b) He can deduct mortgage interest, property taxes, utilities, insurance, and repairs.

(c) He can only deduct property taxes and utilities.

(d) He does not qualify for home office deductions.

36) Krishna is employed by a national real estate company and earns commission income. Hardip is an independent real estate broker and earns commission income. Both maintain an office in their homes as a principal location of work. Which of the following statements is false regarding the tax treatment of their incomes from real estate sales for 2021?

(a) Hardip can incur a non-capital loss, but Krishna cannot.

(b) Hardipand Krishna can deduct a portion of their property tax and house insurance

(c) Hardip can deduct a portion of her home mortgage interest, but Krishna cannot.

(d) Hardip and Krishna can claim CCA on their computers.