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ADMS 3520 Study Guide - Summer 2018, Comprehensive Midterm Notes - Italy, Canada, Software Release Life Cycle


Department
Administrative Studies
Course Code
ADMS 3520
Professor
Thaddeus Hwong
Study Guide
Midterm

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ADMS 3520
MIDTERM EXAM
STUDY GUIDE
Fall 2018

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1 3520 Lecture 1
Canadian Tax Principles (CTP) Selected parts of Chapters 1 and 2 (see references below)
Recommended Problems:
Ch. 1: Exercises One-1, 3, 4 and Self-Study Problem One-1
Ch. 2: All Exercises and Self-study Problems
2 Introduction to Federal Taxation in Canada [ch. 1]
Any tax system has a
base (what to tax);
taxpayer or unit of taxation (who to tax); and
rate (how much to tax).
2.1 Alternative Tax Bases [1-1 to 1-6]
Several different tax bases exist in Canada:
For income taxes (i.e., personal and corporate income taxes), the base is income
For social security/Payroll taxes (e.g., EI, CPP, EHT), the base is salary and benefits
For the HST/GST, the base is the FMV of (most) goods and services
Canada relies more heavily on personal income taxes and less heavily on social security taxes
to
raise revenues than do other countries
See CTP Figure 1-1
2.2 Taxable Entities Income Taxes [1-7 to 1-10]
The Income Tax Act (the “Act” or “ITA”) uses the term “person” to refer to the three entities
that
are subject to federal income taxation individuals, corporations and trusts
The ITA uses the term individual” to refer to a human taxpayer
Individuals (not married couples) file T1s (i.e., personal tax returns) and are taxed at graduated
personal tax rates
The unit of taxation is the individual and the rate is graduated
i.e., the rate is lower at lower income levels and rises as income rises
Corporations file T2s (i.e., corporate tax returns) and are taxed at flat corporate rates with
special reductions for certain private corporations earning business income, etc.
Trusts file T3s (i.e., trust tax returns). Trusts created on death (testamentary trusts) are taxed at
graduated personal rates but trusts created by living taxpayers (inter vivos trusts) are taxed at
the
highest personal rate (33% federally)
The base is taxable income (as defined in the Act) for all these taxpayers, although the rates
differ
Certain entities are exempt from income tax including: municipal governments; most Crown
corporations; registered charities; most non-profit organizations; and pension trusts and
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pension corporations (including RPPs, RRSPs, deferred profit sharing plans and registered
retirement income funds)
2.3 Federal Taxation & the Provinces Personal Income Taxes [1-13 to 1-17]
Before 2000, only Quebec had different rules for personal taxes and a separate return. The other
provinces charged their personal income tax based on a % of federal taxes
Now the federal government still collects personal income taxes for provinces other than
Quebec but the provinces have their own tax rates
All provinces, except Quebec use the same Taxable Income that is calculated at the Federal
level
Each province is able to set different provincial credits to apply against provincial Tax Payable
2.4 Corporate Provincial Income Taxes [1-18 to 1-19]
Alberta and Quebec have separate corporate tax returns and collect their own corporate taxes.
Ontario has harmonized its corporate income tax with the federal income tax and the federal
government (i.e., the CRA) collects and administers Ontario’s corporate income tax
Aside from Alberta and Quebec, provinces use federal taxable income: the computation is done
on the federal tax return and the federal government collects the taxes (and remits to the
province their applicable share)
2.5 GST, PST and Harmonized Sales Tax (HST)
See h
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Any person engaged in commercial activity in Canada must register, collect and remit 5% GST
on taxable supplies (HST is discussed below)
Taxable supplies include most commercial activities (i.e., providing goods or services for
profit) other than zero rated supplies and exempt supplies
Zero rated supplies include: prescription drugs; basic groceries; and goods and services
exported from Canada. Zero rated supplies are not subject to GST; however, the supplier can
still claim input tax credits (ITCs) for GST paid by the supplier (to provide the zero rated
supply)
Exempt supplies include: health care services; primary, secondary and post-secondary
education; financial services; sales of used residential housing; and rentals of residential
properties. Exempt supplies are not subject to GST and the supplier cannot claim ITCs for
GST paid by the supplier (to provide the exempt supply)
However, there is an exemption for small suppliers having $30,000 or less in taxable supplies
each year. Small suppliers do not have to collect and remit HST/GST if they don’t want to
See the guide at h
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In Quebec, Revenue Québec administers the QST which is mostly “harmonized
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