Question

Under section 3 of the​ ITA, the first step in determining a​ corporation's net income is​ ________. Choose the correct answer.

A. determining the excess of taxable capital gains over allowable capital losses

B. adding all positive sources of income

C. netting allowable capital losses against other sources of income

D. netting all positive and negative sources of income

Answer 1

Ans wer is a)Adding all positive sources of income

The relevant extract of Section 3 of Canadian Income tax Act is as below

Quote:

Section 3:The income of a taxpayer for a taxation year for the purposes of this Part is the taxpayer’s income for the year determined by the following rules:

1. determine the total of all amounts each of which is the taxpayer’s income for the year (other than a taxable capital gain from the disposition of a property) from a source inside or outside Canada, including, without restricting the generality of the foregoing, the taxpayer’s income for the year from each office, employment, business and property,

Unquote:

Accordingly to start with computing the income of the person, that is earned inside or outside Canada, from various source, (Other than taxable capital gain from the disposal of a property is the first step in computing the net income as per section 3 of ITA