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12 Cards in this Set
- Front
- Back
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Since there is no statutory definition of the word "income" in the Act, how is the ordinary meaning often established? |
It is customary to refer to prior judicial decisions which may define the term and which, in turn, may have referred to a standard dictionary. |
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What forms can "income" take? |
Income is a monetary receipt that is either:
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What two ways can a monetary receipt be classified and how are they treated? |
Income is more heavily taxed than capital |
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What basic principal of the Canadian Tax system is derived from Adam Smith's concept of income? |
Income is considered to be "net income", that is, gross revenue less expenses incurred to produce revenues. |
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What is the role of the GAAP in the determination of income? |
The GAAP should still be considered but should be put in to the context of overall business practices and should not stand alone. They are not rules of law, but interpretive aids. |
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What is a "constructive receipt"? |
A "constructive receipt" is the inclusion of amounts in the calculation of income which may not have actually been received but are beneficially received or receivable. |
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What is the "doctrine of constructive receipt"? |
The constructive receipt must be beneficially received or receivable by the taxpayer so that his or her use of the amounts is free and unrestricted. Otherwise, it cannot be considered a "constructive receipt". |
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What is the "aggregation formula" of income computation? |
(Worldwide income PLUS Net taxable gains) LESS General deductions not attributable to any source LESS Negative amounts or losses from non-capital sources EQUALS "Division B income" or "income tax for tax purposes." |
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What is the basic formula for the determination of taxable income? |
Division B income (income for tax purposes) LESS Division C deductions EQUALS Taxable income |
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What are the ordering rules applicable to individuals for Division C? |
Sec. 110: Sundry deductions Sec. 110.2: Lump-sum payments Sec. 111: Various loss carry-overs Sec. 110.6: Capital gains deductions Sec. 110.7: Residing in a prescribed zone |
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How is basic federal tax computed? |
The appropriate percentage is determined based on the amount of taxable income and a number reached. Then any applicable tax credits (Division E) are deducted. |
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What are the first four ordering rules applicable to individuals for non-refundable tax credits from Division E? |
Sec. 118(1): Personal credits Sec. 118(2): Age credit Sec. 118.7: EI premium and CPP contribution credits Sec. 118(3): Pension credit |
