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1

What is Tax: Provide two general definitions of a tax
Provide a general definition of tax

"A compusory transfer of money from private individuals or organizations to the government not paid in exchange for some specific good or benefit"

2

What is Tax: Provide two general definitions of a tax
How does Hogg, Magee and Li define tax?

"a levy, enforceable by law imposed under the authority of a legislature, imposed by a public body and levied for a public purpose" from Kempe v R (2000) (TCC). 

3

What is Tax: Provide two general definitions of a tax

What are the two common features of the general definitions?

Common features are:
1) "compulsory" and "enforceable by law"
2) "transfer of money" and "levy"

4

What is Tax: Show the difficulty in identifying a “tax” by reference to an example.

Fines: some things are more akin to penalties or fines intended to deter, as opposed to revenue-raising like taxes --> the definitions don't separate fines and penalties; although the money-making function is SECONDARY

5

Classification of Taxes: Identify and briefly describe ten different types of taxes

Income Tax

Income Tax: a tax on the INCOME of a TAX UNIT

6

Classification of Taxes: Identify and briefly describe ten different types of taxes

Excise Tax (Excise Tax Act)

Generally: tax on the QUANTITY or VALUE of output of production

Sales tax: tax on SALE to the consumer

Value-added tax: tax on VALUE ADDED at particular stage of production (designed to tax OVERALL VALUE ADDED) e.g. GST

7

Classification of Taxes: Identify and briefly describe ten different types of taxes

Wealth Tax

tax on the WEALTH of a particular taxation unit (e.g. capital gains, estate tax)

8

Classification of Taxes: Identify and briefly describe ten different types of taxes

Tariffs (Customs Tariff Act)

tax levied on IMPORT of goods

9

Classification of Taxes: Identify and briefly describe ten different types of taxes

Head Tax

tax at SET AMOUNT typically applied to INDIVIDUALS (e.g. Chinese Head Tax)

10

Classification of Taxes: Identify and briefly describe ten different types of taxes

Property Tax

tax on REGULAR BASIS on the REAL PROPERTY owned by the taxpayer

11

Classification of Taxes: Identify and briefly describe ten different types of taxes

Transfer Tax

tax on PARTICULAR TRANSACTIONS such as a property transfer tax

12

Classification of Taxes: Identify and briefly describe ten different types of taxes

User Tax/Use Fees

Tax on individual USERS OF PARTICULAR SERVICES or FACILITIES (e.g. highway/bridge toll, incorporation fee, filing fee)

13

Classification of Taxes: Identify and briefly describe ten different types of taxes

List the 10 types of taxes

1) Income Tax
2) Excise Tax (Sales Tax, Value-added tax)
3) Tariffs
4) Head Tax
5) Property Tax
6) Transfer Tax
7) User Tax

14

****Roles of the Income Tax: IDENTIFY AND DESCRIBE THREE MAIN ROLES OF INCOME TAXES.

1) REVENUE- raise revenue; by far most important source of income (63%) for fed gov

2) REDISTRIBUTE- tax collected from higher income (high income -> high tax) and returned through social programs

3) REGULATION of Private Activity - i.e. use deductions to encourage certain activities or tax more for other activities

15

Sources of Income Tax Law: ID & describe 7 primary sources of income tax law

List 7 primary sources

1. Income Tax Act***** - primary source
2. Income Tax Application Rules (ITARs)
3 Income Tax Regulations
4 Tax Treaties
5 Case Law
6 Provincial Income Tax Acts (NOT ON EXAM)
7 Private Law

16

Sources of Income Tax Law: ID & describe 7 primary sources of income tax law

Describe Income Tax Act

current version is the Income Tax Act - enacted in December 23, 1971 and came into force on January 1, 1972

SEE OTHER FLASHCARDS FOR MORE DETAIL

17

Sources of Income Tax Law: ID & describe 7 primary sources of income tax law

ITARs

Income Tax Application Rules

- enacted with 1971 Act
- Rules to help TRANSITION from OLD act to NEW act (still relevant for dispositions of property from before 1972)

18

Sources of Income Tax Law: ID & describe 7 primary sources of income tax law

Income Tax Regulations

Income Tax Regulations made under authority given to GOVERNOR IN COUNCIL under SECTION 221 of the Act

19

Sources of Income Tax Law: ID & describe 7 primary sources of income tax law

Tax Treaties

80+ Treaties

Primarily to AVOID DOUBLE TAXATION

OVERRIDES THE INCOME TAX ACT

20

Sources of Income Tax Law: ID & describe 7 primary sources of income tax law

Case Law

Set out in CANADIAN TAX CASES (C.T.C.) and Dominion Tax Cases (D.T.C.) - cited AHEAD of official report

Common issues include:
RESIDENCE,
income,
business vs capital gain,
EXPENSES,
accounting principles
WHETHER LOSSES ARE FULLY DEDUCTIBLE

21

Sources of Income Tax Law: ID & describe 7 primary sources of income tax law

Provincial Income Tax Acts

NOT ON EXAM
- Provincial taxes COLLECTED by FEDERAL government (EXCEPT Quebec)

22

Sources of Income Tax Law: ID & describe 7 primary sources of income tax law

Private Law

General law for issues such as WHEN A PERSON IS ENTITLED TO INCOME --> e.g. business law, employment law, contract law, partnership law

23

Sources of Income Tax Law: ID & describe 8 secondary sources of income tax law

List secondary sources

Administrative Publications FROM THE CANADA REVENUE AGENCY (CRA)
1. Forms 2. Guides 3. Information Circulars 4. Interpretation Bulletins 5. Income Tax Folios 6. Advance Income Tax Rulings 7 Private Publications

Private Publications (e.g. McCarthy's)

24

Sources of Income Tax Law: ID & describe 8 secondary sources of income tax law

Forms

e.g. T4, T1 tax forms

25

Sources of Income Tax Law: ID & describe 8 secondary sources of income tax law

Guides

E.g. General Income Tax and Benefit Guide

26

Sources of Income Tax Law: ID & describe 8 secondary sources of income tax law

Information Circulars

- began in 1970
- provide tax info to GENERAL PUBLIC
- available from CRA offices and website

27

Sources of Income Tax Law: ID & describe 8 secondary sources of income tax law

Interpretation Bulletins

- began in 1970
- for ACCOUNTANTS AND LAWYERS
- assessments conducted BASED ON INTERPRETATION BULLETINS
- usually safe in relying on these;
- PERSUASIVE but don't have force of law
- NO ESTOPPEL for CRA (Stickel v MNR)

28

Sources of Income Tax Law: ID & describe 8 secondary sources of income tax law

Income Tax Folios

- began to REPLACE Interpretation Bulletins in 2013
- NOT binding on CRA; NOT the law itself (but persuasive)

29

Sources of Income Tax Law: ID & describe 8 secondary sources of income tax law

Advance Income Tax Rulings

- began formally in 1979 - advance tax rulings AT REQUEST OF TAXPAYER; allows taxpayer to better plan for transaction - NOT binding on CRA (Woon v MNR)

30

Interpretation: Approaches

List the three approaches (and which is current)

1) Strict interpretation approach (OLD approach)
2) Modern Rule (CURRENT approach)
3) Textual, Contextual and Purposive Approach (EXPANSION on Modern Rule)