Exam (elaborations)
Income Tax Chapter 1 Questions and Answers
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Income Tax Chapter 1
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Income Tax Chapter 1t/f A value added tax is a tax levied on the increase in value of a commodity or service
that has been created by the taxpayer's stage of the production or distribution cycle. -
answer True
t/f Only individuals, corporations, and trusts are taxable entities for income tax purposes
- answer False
t/f Partnerships engaged in commercial activity are taxable entities for GST purposes. -
answer True
t/f In general, provincial taxes are based on a specified percentage of federal taxable
income - answer False
t/f The federal government collects taxes for Ontario. - answerfalse
t/f Even if the rate is the same on all transactions, it will be a higher rate on the taxable
income of lower income individuals because they spend a larger percentage of their
income - answerTrue
t/f Progressive rates discourage both employment and investment, thereby limiting
economic growth. - answerfalse
t/f Tax expenditures are less costly to administer than direct funding programs. -
answerTrue
t/f Part I of the Income Tax Act is the largest and the most important part. - answerTrue
t/f The citation ITA 61(4)(b)(ii) would be read Section 61, Subsection 4, Paragraph b,
Subparagraph ii. - answerFalse
Which of the following types of taxes is not currently in use by the federal government of
Canada? - answerhead tax
Which of the following is NOT a taxable entity for Canadian income tax purposes? -
answerWalters and Walters, a group of CPAs operating as a partnership
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