Canadian Tax Principles, 2023-2024 (Byrd/Chen) Chapter 1 Introduction to Federal Taxation in Canada 1.1 Online Exercises 1) The major source of federal revenues is the personal income tax. Indicate three other types of taxes that contribute to federal revenues. Answer: The other sources of federal revenues that are shown in Figure 1-1 of the textbook are: • Corporate income tax. • Non-resident income tax. • GST. • Customs and import duties. • Other excise taxes. • Employment Insurance premiums. Type: ES Topic: Federal revenue sources 2) What is the meaning of "person" when the term is used in the ITA? Answer: In the ITA, the term "person" refers to an individual, a corporation, a trust or an estate. Type: ES Topic: Definition - "Person" ITA 248(1) 3) Briefly describe the procedures used in calculating provincial or territorial income tax for individuals other than for individuals residing in Quebec. Answer: Provincial or territorial income tax for individuals are calculated by applying a provincial or territorial income tax rates to taxable income for federal income tax purposes. Provincial or territorial personal income tax credits are then applied to the resulting gross income tax. The provincial and territorial income tax brackets may differ from the federal income tax brackets. In addition, provincial and territorial personal tax credits may be different than the federal personal tax credits. Type: ES Topic: Income tax payable - federal income tax 4) The Canadian income tax system is often used to achieve various economic objectives. Give three examples that illustrate this point. Answer: There are many examples. The textbook divides them into resource allocation (e.g., public health care), distribution effects (e.g., federal GST credit), stabilization effects (e.g., deficit reduction), and fiscal federalism (e.g., allocations to various levels of government). Type: ES Topic: Canadian income tax system - objectives 5) Provide an example of how tax policy can be used to influence resource allocation. Answer: Examples provided in the textbook are as follows: • Tax revenues are used to provide public goods and services. • Excise taxes are used to discourage the consumption of alcohol and tobacco products. There are many other examples that could be cited. Type: ES Topic: Canadian income tax system - objectives