To provide practice in problemsolving, these are the Self Study Problems for Volume 1 which
includes Chapters 1 to 10. The detailed solutions to these
... [Show More] problems are available in both the
print and online Study Guide.
For additional practice in problem solving, there are Supplementary Self Study Problems with
detailed solutions available for each chapter. These problems and solutions are available in
this file after the Self Study problems for each Chapter.
Canadian Tax Principles - Self Study And SSS Problems (2018/2019)
Self Study And SSS Problems For Chapters 1 to 10 Volume 1 Page 1
Chapter 1 Self Study Problems
Self Study Problem One - 1
(Regressive Taxation)
A regressive tax can be described as one which is assessed at a lower rate as income levels
increase. Despite the fact that the Harmonized Sales Tax (HST) is based on a single rate, it is
referred to as a regressive form of taxation.
Required: Explain how a tax system with a single rate can be viewed as regressive.
SOLUTION available in printed and online Study Guide.
Self Study Problem One - 2
(Flat Rate Tax)
At a recent cocktail party,Mr. Right was heard complaining vehemently about the lack of progress
towards tax simplification. He was tired of spending half of his time filling out various CRA
forms and, if the matter were left to him, he could solve the problem in 10 minutes. “It is
simply a matter of having one tax rate and applying that rate to 100 percent of income.”
Required: Discuss Mr. Right’s proposed flat rate tax system.
SOLUTION available in printed and online Study Guide.
Canadian Tax Principles - Self Study And SSS Problems (2018/2019)
Chapter 1 Self Study Problems Volume 1 Page 2
Self Study Problem One - 2
Self Study Problem One - 3
(Qualitative Characteristics)
In recent years, the government has introduced a number of changes in tax legislation related
to individuals. A selected group of these measures can be described as follows:
Family Tax Cut This provision provided a tax reduction based on a limited amount
of income splitting . Specifically, a separate calculation of Tax Payable was based on
the assumption that up to $50,000 of Taxable Income was transferred from a higher
income spouse to a lower income spouse. It was only available to couples with a child
under the age of 18. This provision was repealed in 2016.
Lifetime Capital Gains Deduction An increase in the provision to remove from
Taxable Income, capital gains on the disposition of a qualified farming or fishing property
from $813,600 (2015 limit) to $1,000,000.
Home Accessibility Tax Credit A new credit against Tax Payable equal to 15
percent of up to $10,000 in expenditures made by seniors and disabled people to gain
access to, be more mobile within, or reduce the risk of harm within, their home.
Small Business Rate A reduction scheduled for 2016 (2 years in the future) in the
federal tax rate on active business income earned by Canadian Controlled Private
Companies. The rate was reduced from 11 percent of Taxable Income to a new rate
equal to 10.5 percent of Taxable Income.
Increase In Tax Free Savings Account (TFSA) Limits The TFSA provision allows
non-deductible contributions to be made to a registered account where earnings
accumulate on a tax free basis. Withdrawals from these accounts are not taxed. The
annual limit on contributions to Tax Free Savings Accounts (TFSAs) was increased from
$5,500 to $10,000 for 2015. This increase was reversed in 2016.
Required: Analyze each of the described changes using two of the qualitative characteristics
of tax systems that are listed in your text. For your convenience, the list of qualitative
characteristics presented in the text is as follows:
• equity or fairness
• neutrality
• adequacy
• elasticity
• flexibility
• simplicity and ease of compliance
• certainty
• balance between sectors
• international competitiveness
SOLUTION [Show Less]