Submitted by: Submitted by coralie
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Words: 1784
Pages: 8
Category: Business and Industry
Date Submitted: 10/29/2012 09:01 PM
TAXATION
Question 1
a. 2)
b. 1)
c. 3)
d. 3)
e. 2)
f. 3)
g. 3)
Deemed dividend — 8,000 – 1,000 = 7,000 × 1.25 = 8,750
Allowable Business Inv. Loss — 1/2 (1,000 – 10,000) = 4,500
h. 4)
i. 1)
j. 4)
k. 4)
L. 4)
m. 1)
n. 2)
o. 4)
Question 2
a. 2)
b. 4)
c. 3)
d. 4)
j. 2)
k. 2)
l. 2)
m. 4)
n. 1)
o. 2)
106. Answer: d.
As Tom is not a GST registrant and his revenue does not exceed $30,000, he is not permitted to charge his patients GST.
107. Answer: a.
The Manufacturing and Processing Profits Deduction is limited to the corporation’s manufacturing and processing profits not eligible for the small business deduction.
108. Answer: c.
Proceeds of disposition $300,000
Less:
Adjusted cost base $110,000
Disposition costs 8,000 118,000
Total capital gain $182,000
Non-taxable (1/2) 91,000
Total taxable capital gain $91,000
109. Answer: a.
($60,000)(.02)(12) = $14,400.
110. Answer: b.
Dividend @ 5% ($30,000) $1,500
Gross up 25 % 375
Taxable dividend 1,875
Federal tax (29%) (544)
Dividend tax credit ($375) x 2/3 250
Federal tax payable $ 294
Therefore, after tax income = $1,500 - $294 = $1,206.
111. Answer: a.
A person who either enters or leaves Canada part way through the year on a permanent basis is a part-year resident rather than a deemed resident.
112. Answer: d.
The annual business limit determines the maximum amount of income that is eligible for the small business deduction.
113. Answer: d.
Because the proceeds were greater than the undepreciated capital cost, there is no loss for tax purposes. Because the proceeds were less than the capital cost, there is no capital gain. However, there is recapture of...