Question 1

In the Canada-U.S.tax treaty,the definition of a 'permanent establishment' does not include

Accepted Answer

A) a place of management. 
B) a factory. 
C) a storage facility. 
D) an office. 
A) a place of management. 
B) a factory. 
C) a storage facility. 
D) an office. C

Question 2

Which of the following lists are acceptable methods for adopting a reasonable transfer price between a Canadian parent and its foreign subsidiary corporations?

Accepted Answer

A) Comparable arm's-length selling price method; cost-plus method; resale price method 
B) Cost-plus method; resale price method; profit-margin method 
C) Lowest tax rate method; resale price method; comparable arm's-length selling price method 
D) Comparable arm's-length selling price method; lowest tax rate method; profit-margin method 
A) Comparable arm's-length selling price method; cost-plus method; resale price method 
B) Cost-plus method; resale price method; profit-margin method 
C) Lowest tax rate method; resale price method; comparable arm's-length selling price method 
D) Comparable arm's-length selling price method; lowest tax rate method; profit-margin method A

Question 3

The Sweater Corp.is a Canadian corporation which plans to expand internationally.The company has decided to establish a wholly-owned foreign subsidiary corporation in another country.Which of the following is FALSE?

Accepted Answer

A) The subsidiary will be subject to taxes in the foreign country. 
B) The subsidiary's profits will be included in the Canadian corporation's worldwide income. 
C) Dividends received by the Canadian corporation from the foreign subsidiary are excluded from the Canadian corporation's taxable income. 
D) Dividends received by the Canadian corporation from the foreign subsidiary are most often subject to a withholding tax in the foreign jurisdiction. 
A) The subsidiary will be subject to taxes in the foreign country. 
B) The subsidiary's profits will be included in the Canadian corporation's worldwide income. 
C) Dividends received by the Canadian corporation from the foreign subsidiary are excluded from the Canadian corporation's taxable income. 
D) Dividends received by the Canadian corporation from the foreign subsidiary are most often subject to a withholding tax in the foreign jurisdiction. B

Question 4

Andy Griffin would like to invest $150,000 in Foreign Co.,which was founded and operates in a foreign country.This investment would give Andy 25% ownership of the company.An annual dividend of $15,000 (Canadian funds)is anticipated.
Andy's personal marginal tax rate is 45% on regular income,28% on eligible dividends,and 37% on non-eligible dividends.The foreign company is subject to a tax rate of 38% on all business income.Any dividends received by Andy,personally,will be subject to a 15% withholding tax.
Required:
1)Determine the total tax liability (foreign and Canadian)that Andy will be subject to upon receiving dividends from Foreign Co.
2)How would your answer in part 1 change if Andy established a Canadian holding company to purchase the shares,(subject to a 5% withholding tax on dividends received)?
3)What would Andy's after-tax proceeds be if he received eligible dividend income from the holding company?

Accepted Answer

"1.The combination of foreign and Canadi

Question 5

The Great Big Company (GBC)is a CCPC located in Saskatchewan.GBC owns a foreign subsidiary,The Little Company (TLC).GBC manufactures electronic component parts which are then sold to TLC for assembly.GBC is subject to a 27% corporate tax rate and TLC is subject to a 19% corporate tax rate.Fiona Big,the CEO of GBC,has mentioned that due to the lower tax rate in the foreign country,the profits of GBC could be shifted to TLC by adjusting the selling price of the component parts.
Required:
A)Can Fiona Big adjust the selling price of the component parts in order to take advantage of the lower tax rate? Why or why not?
B)What are three methods used to establish transfer prices for non-arm's length transactions?

Accepted Answer

A)Fiona cannot adjust the selling price

Question 6

The Running Shoe Corp.is a Canadian corporation which plans to expand internationally.The company has decided to establish a branch in a foreign country.Which of the following is FALSE?

Accepted Answer

A) The profits of the branch will be subject to income tax in the foreign country. 
B) The branch profits will be included in the Canadian corporation's worldwide income. 
C) A foreign tax credit can reduce the Canadian taxes payable. 
D) If the foreign country has a lower tax rate, a tax benefit will be recognized. 
A) The profits of the branch will be subject to income tax in the foreign country. 
B) The branch profits will be included in the Canadian corporation's worldwide income. 
C) A foreign tax credit can reduce the Canadian taxes payable. 
D) If the foreign country has a lower tax rate, a tax benefit will be recognized.

Question 7

Which of the following statements is TRUE concerning domestic expansion of a business?

Accepted Answer

A) Cash funding requirements will be lower to establish a new corporation than a corporate division if the expansion activity incurs substantial start-up losses. 
B) Cash funding requirements will be higher to establish a new corporation than a corporate division if the expansion activity incurs substantial start-up losses. 
C) Obligations of a new division will have no impact on the founding corporation. 
D) The main advantage of incorporating an expansion activity is the use of start-up losses from the new corporation against income from the founding corporation. 
A) Cash funding requirements will be lower to establish a new corporation than a corporate division if the expansion activity incurs substantial start-up losses. 
B) Cash funding requirements will be higher to establish a new corporation than a corporate division if the expansion activity incurs substantial start-up losses. 
C) Obligations of a new division will have no impact on the founding corporation. 
D) The main advantage of incorporating an expansion activity is the use of start-up losses from the new corporation against income from the founding corporation.

In the Canada-U.S.tax treaty,the definition of a 'permanent establishment' does not include

Which of the following lists are acceptable methods for adopting a reasonable transfer price between a Canadian parent and its foreign subsidiary corporations?

The Sweater Corp.is a Canadian corporation which plans to expand internationally.The company has decided to establish a wholly-owned foreign subsidiary corporation in another country.Which of the following is FALSE?

The Running Shoe Corp.is a Canadian corporation which plans to expand internationally.The company has decided to establish a branch in a foreign country.Which of the following is FALSE?

Which of the following statements is TRUE concerning domestic expansion of a business?

Taxation-Its Role in Decision Making

Fundamentals of Tax Planning

Liability for Tax, Income Determination, and Administration of the Income Tax System

Income From Employment

Income From Business

The Acquisition, Use, and Disposal of Depreciable Property

Income From Property

Gains and Losses on the Disposition of Capital Propertycapital Gains

Other Income, Other Deductions, and Special Rules for Completing Net Income for Tax Purposes

Individuals: Determination of Taxable Income and Taxes Payable

Corporationsan Introduction

Organization, Capital Structures, and Income Distributions of Corporations

The Canadian-Controlled Private Corporation

Multiple Corporations and Their Reorganization

Partnerships

Limited Partnerships and Joint Ventures

Trusts

Business Acquisitions and Divestituresassets Versus Shares

Business Acquisitions and Divestiturestax-Deferred Sales

Tax Aspects of Corporate Financing

Gsthst Overview

Filters

Exam 20: Domestic and International Business Expansion

In the Canada-U.S.tax treaty,the definition of a 'permanent establishment' does not include

Which of the following lists are acceptable methods for adopting a reasonable transfer price between a Canadian parent and its foreign subsidiary corporations?

The Sweater Corp.is a Canadian corporation which plans to expand internationally.The company has decided to establish a wholly-owned foreign subsidiary corporation in another country.Which of the following is FALSE?

The Running Shoe Corp.is a Canadian corporation which plans to expand internationally.The company has decided to establish a branch in a foreign country.Which of the following is FALSE?

Which of the following statements is TRUE concerning domestic expansion of a business?

Taxation-Its Role in Decision Making

Fundamentals of Tax Planning

Liability for Tax, Income Determination, and Administration of the Income Tax System

Income From Employment

Income From Business

The Acquisition, Use, and Disposal of Depreciable Property

Income From Property

Gains and Losses on the Disposition of Capital Propertycapital Gains

Other Income, Other Deductions, and Special Rules for Completing Net Income for Tax Purposes

Individuals: Determination of Taxable Income and Taxes Payable

Corporationsan Introduction

Organization, Capital Structures, and Income Distributions of Corporations

The Canadian-Controlled Private Corporation

Multiple Corporations and Their Reorganization

Partnerships

Limited Partnerships and Joint Ventures

Trusts

Business Acquisitions and Divestituresassets Versus Shares

Business Acquisitions and Divestiturestax-Deferred Sales

Tax Aspects of Corporate Financing

Gsthst Overview

Filters