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Quiz: Tax instalments

6 questions

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1 When is an individual required to pay instalments? Where net tax owing exceeded the threshold in both of the two preceding years Where CRA has issued an instalment reminder Where net tax owing exceeds the threshold in the current year and also exceeded it in either of the two preceding years Where net tax owing exceeds the threshold in the current year

Answer key unconfirmed — rests on 4 unverified claims.

2 A taxpayer paid exactly the amounts on CRA's instalment reminders, on time, and her actual liability turned out much higher. Is she charged instalment interest? Yes, on the shortfall against her actual liability Only if the shortfall exceeds a threshold No — paying the reminder amounts in full and on time avoids instalment interest even if those amounts prove too low Yes, but at a reduced rate

Answer key unconfirmed — rests on 2 unverified claims.

3 A taxpayer never received an instalment reminder and concludes he owes no instalments. Correct, provided he did not receive a reminder in the prior year either Incorrect, but no interest applies where no reminder was sent Correct — the reminder creates the obligation Incorrect — the obligation arises from the Income Tax Act and can exist even where CRA has not issued a reminder

Answer key unconfirmed — rests on 3 unverified claims.

4 When are quarterly instalments due? The last day of each quarter April 30, July 31, October 31 and January 31 March 31, June 30, September 30 and December 31 March 15, June 15, September 15 and December 15

Answer key unconfirmed — rests on 2 unverified claims.

5 A taxpayer missed the March instalment but paid extra in June. How is instalment interest calculated? On the March shortfall alone, regardless of later payments At a flat rate on the total of all shortfalls Only from the filing deadline, not from each instalment date At the prescribed rate, compounded daily, netted across the year so an early or larger payment can offset a late or short one

Answer key unconfirmed — rests on 2 unverified claims.

6 A taxpayer objects that instalments amount to being taxed twice. They represent the same tax paid earlier, and are not an additional tax or a penalty They are a deposit that is refunded on assessment They are an additional charge for taxpayers with untaxed income They are a penalty for having insufficient tax withheld at source

Answer key unconfirmed — rests on 1 unverified claim.

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