5-Which one of the following statements best describes the general anti-avoidance rule (GAAR) included in the Income Tax Act? Group of answer choices

The key to understanding the anti-avoidance rules lies in establishing whether a transaction results in a tax benefit

In order for a transaction to be considered an avoidance transaction, its primary objective must be other than to obtain a tax benefit

A transaction will not be an avoidance transaction if the taxpayer establishes that it is undertaken primarily for bona fide tax purposes

When a person is involved in a misuse of the provisions of the tax act or an abuse of those provisions read as a whole, tax will be adjusted to deny the tax benefit that would have resulted from the transaction(s).

6-Salaries and bonuses paid must be reasonable in the circumstance [sec 67] in order to be deductible. The Tax act has no definition for the word reasonability. Which of the following guidelines is false when it comes to proving the expense is reasonable?

Group of answer choices

Payment is for real and identifiable services.

There is no need to justify a bonus over a regular salary as long the company is consistent year after year.

There is a legal obligation to pay the accrued bonus.

There is some kind of formula that the corporation practices to establish the bonus

7-Which one of the following entities is subject to tax on it worldwide income under Part 1 of the Income Tax Act? Group of answer choices

An individual who is a resident of the United States and sojourns in Canada for 170 days during the year

A business partnership of which 80% of its partners are residents of Canada

A corporation that is incorporated in Canada, but operates a business in Hong Kong, and has shareholders who are all residents of the United States

An individual who is a resident of the United States and carries on a business in Canada throughout the year