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Quiz: Self-employment and business income

8 questions

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1 A self-employed consultant invoiced in December and was paid in February. When is the revenue recognised? Split between the two years When received, in February When earned and receivable, in December, on the accrual basis At his election, applied consistently

Answer key unconfirmed — rests on 3 unverified claims.

2 A taxpayer bought equipment for her business and wants to deduct the whole cost this year. Capital expenditures are never deductible in any form A capital expenditure is depreciated through capital cost allowance under prescribed classes and rates rather than deducted in full She may, since it was incurred to earn income She may deduct half now and half next year

Answer key unconfirmed — rests on 2 unverified claims.

3 Which of these limits apply to self-employed expense claims? Select all that apply.

Select all that apply.

Business-use-of-home cannot create or increase a business loss; the unused portion carries forward Expenses with both a business and a personal element must be apportioned, and only the business portion is deductible Vehicle claims must be supported by a logbook recording business and total kilometres Meals and entertainment are deductible at 50% of the amount incurred, subject to exceptions Commuting between home and a regular place of business is deductible for the self-employed

Answer key unconfirmed — rests on 4 unverified claims.

4 A caller runs a activity that has lost money for years and wants to deduct the losses. An activity carried on with a view to profit is a business; losses from a hobby are not deductible Losses are deductible only against income from the same activity Losses are deductible provided records are kept Losses are deductible for the first five years of any activity

Answer key unconfirmed — rests on 2 unverified claims.

5 A self-employed individual asks about CPP and EI on her business income. She pays both portions of CPP and both portions of EI She pays only the employee portion of CPP and no EI She pays neither CPP nor EI She pays both the employee and employer portions of CPP; she does not pay EI premiums on business income and is not covered for regular EI benefits, but may elect into coverage for certain special benefits

Answer key unconfirmed — rests on 2 unverified claims.

6 When must a self-employed individual register for GST/HST? On starting any business activity Once taxable supplies exceed the threshold in a single calendar year Only where the business sells goods rather than services Once taxable supplies exceed the small supplier threshold, measured over a rolling four-quarter period

Answer key unconfirmed — rests on 1 unverified claim.

7 A business had a bad year and made a loss. What can be done with it? Carried forward indefinitely but not back Applied only against future business income from the same business Carried back three years and forward twenty against income of those years Carried back three years and forward indefinitely

Answer key unconfirmed — rests on 1 unverified claim.

8 A self-employed taxpayer sold a depreciable asset for more than its remaining undepreciated cost. What follows? The excess is always a capital gain and never income Nothing — the proceeds are a capital receipt A recapture of capital cost allowance may be included in income; a disposal at a shortfall can instead produce a terminal loss The prior years' CCA claims are reversed by amending those returns

Answer key unconfirmed — rests on 2 unverified claims.

Unanswered questions are marked wrong. There is no partial credit.