Personal & Corporate Taxation [TX1] Examination Blueprint
2014/2015
Purpose
The Personal & Corporate Taxation [TX1] examination has been constructed using an examination blueprint. The blueprint, also referred to as the test
specifications, outlines the content areas covered on the examination and the weighting allotted to each content area. This document also lists the topics,
the level of competence for each topic, and the related learning objectives and competencies. The learning objectives have been designed to ensure that
the competencies for the course are met. In addition, information is provided on the proportion of each question type presented in the examination (that is,
multiple choice, quantitative problems, and so on).
Use
Students should use the examination blueprint to prepare for the course examination. The blueprint may not include all the topics listed in the course
materials; however, students are still responsible for acquiring a broad-based knowledge of all topics not listed in the blueprint since these topics will be
tested in assignment and review questions. The topics not listed in the blueprint will also provide students with a greater depth of understanding of
taxation concepts.
Personal & Corporate Taxation [TX1] Examination Objectives
The objectives of this 3-hour, comprehensive examination are to test CGA students on the prerequisite knowledge that is required for advancement into
PA1 and PA2, and to ensure that students have the broad-based knowledge in taxation needed to function properly in upper-level education and
certification courses.
Examination Guidelines for Questions
i)
Question Type
The following are guidelines on the type of questions and their approximate weightings:
Question Item
Multiple-choice
questions
Short-answer and/or
short case-type
problems of both a
qualitative and
quantitative nature.
Description
Questions may take a conceptual approach or they may require analytical skills to derive the correct
solution.
Questions may focus on technical or analytical aspects of the material. Short, integrative cases may be
used to pull together related issues. For example, a problem may require students to outline alternatives,
supporting their recommendations with numerical analysis. Several questions will also be decision
oriented, where the student is asked to take the role of creditor, investor, manager or auditor and make a
recommendation or a decision based on analysis performed.
Percentage
Weighting
20%–30%
70%–80%
ii) Question Content
The following table is organized according to content area and provides information on topics, learning objectives, levels of competence,
competencies, and weighting.
Examination sessions: March 2015; June 2015; September 2015
Page 1 of 11
Personal & Corporate Taxation [TX1] Examination Blueprint
Content
Topics
Area
1. Introduction and concept of income
Learning Objectives
Levels of
Competence
1.1
Income tax: History,
objectives, and legislative
process
 Outline the role of income tax in Canadian finances
and the tax policy principles underlying the
Canadian tax system and explain the legislative
process to amend the ITA.
Levels 1 and 2
1.2
Professional ethics
 Identify situations where ethical problems may
occur and analyze ethical problems related to tax
planning, preparation, and advising.
Level 1
1.3
Tax evasion, avoidance, and
planning
 Distinguish between tax evasion, tax avoidance,
and tax planning, giving a broad outline of the
general anti-avoidance rule.
Level 1
1.4
Administration and
enforcement
 Describe the procedures for: filing tax returns,
assessments, the payment of taxes, and appealing
assessments, and demonstrate a general knowledge
of the powers conferred on the Canada Revenue
Agency (CRA) for administering and enforcing the
ITA, including the civil penalties applicable to
third parties.
Levels 1 and 2
1.5
Structure and interpretation of
the Income Tax Act
 Describe the structure of the ITA and interpret its
provisions.
Level 1
1.6
Learning to use the ITA
 Explain how to use the ITA.
Level 1
1.7
Steps in computing income
tax
 Describe the steps in the computation of Part I tax.
Level 1
1.9
Liability for Part I tax
 Determine who must pay income tax in Canada and
on what income and determine if a person is
resident in Canada.
Level 1
1.10 Computation of income
 Describe the source concept and compute income
for tax purposes for a taxpayer liable for Part I tax.
Level 1
1.11 Steps in computing income
 Calculate income (net income) according to section
3 of the ITA.
Level 1
Examination sessions: March 2015; June 2015; September 2015
Competencies
Weighting
(%)
4%-8%
 PK:BE:02: Advises on business
decisions in the context of larger
economic and geopolitical
conditions.
 PK:BE:04: Advises on business
decisions in the context of the
legal framework.
 PK:IT:02: Selects and uses
appropriate business technology
tools in the workplace.
 PR:ET:01: Applies professional
ethical standards.
 PR:ET:02: Exercises integrity
and a high level of professional
judgment.
 PR:ET:05: Plans and exercises
due diligence.
 PR:PD:02: Contributes to
research and technical
advancements in the profession.
 PK:TX:01: Determines and
advises on taxpayer’s regulatory
requirements and exposure.
 PK:TX:02: Determines and
advises on taxpayer’s tax liability.
 PK:TX:03: Ensures compliance
with all taxation reporting and
filing requirements.
 PK:TX:04: Reviews, advises on,
and replies to assessments and reassessments.
 PK:TX:05: Advises on and
provides support for objections,
appeals, and litigation.
 PR:CM:03: Communicates
information in a timely, clear, and
concise manner.
Page 2 of 11
Content
Area
2. Employment income
Levels of
Competence
Topics
Learning Objectives
2.1
Definition of income from
office and employment
 Explain and apply the basic rules used to determine
employment income and the criteria for
differentiating between an employee and an
independent contractor.
Level 1
2.2
Ethical concerns in tax
planning for employees
 Comment on ethical issues that a CGA may face in
tax planning for employees.
Level 1
2.3
Amounts to include in
employment income
 Determine the amounts taxable as income from
employment and the value of non-cash taxable
benefits received by virtue of employment.
Level 1
2.4
Automobiles and other taxable
benefits
 Determine the amount taxable as employment
benefit for employer-provided automobiles, loans,
and housing subsidies including the taxation of
allowances.
Level 1
2.5
Stock options
 Determine the amounts and the timing of income
inclusion of the benefit when an employee acquires
shares under a stock option plan.
Level 1
2.6
Deductions in computing
employment income
 Determine and calculate deductions allowed in
computing employment income.
Level 1
Examination sessions: March 2015; June 2015; September 2015
Competencies
Weighting
(%)
8%-11%
 PR:ET:01: Applies professional
ethical standards.
 PK:IT:02: Selects and uses
appropriate business technology
tools in the workplace.
 PK:TX:02: Determines and
advises on taxpayer’s tax liability.
 PK:TX:08: Evaluates and
advises on tax implications of
alternative business decisions.
 PR:PS:02: Collects, selects,
verifies, and evaluates
information relevant to the
problem.
Page 3 of 11
Content
Area
3. Business income
Topics
Learning Objectives
Levels of
Competence
3.1 Definition of business income
 Identify the criteria for differentiating business
income from employment income, capital gains,
and income from property, and distinguish between
business income and income from a hobby or
personal venture.
Level 1
3.2 General principles
 Explain how sections 9, 12, 18, and 20 are the
foundation for business income taxation and
explain the difference between business income for
tax purposes and accounting income.
Level 1
3.3 Amounts included in
computing business income
 Describe the general rules relating to amounts that
must be included in computing business income.
Level 1
3.4 Restrictions on deductions
 Explain and apply the restrictions and general
principles applicable to expense deduction in
computing business income.
Level 1
3.5 Permitted deductions
 Identify some expenses that are specifically
deductible.
Level 1
3.7 Cessation of a business and
ethical issues
 Explain dispositions that occur when a business
ceases; analyze a difficult ethical situation and
generate possible courses of action.
Levels 1 and 2
Examination sessions: March 2015; June 2015; September 2015
Competencies
Weighting
(%)
12%-17%
 PK:TX:02: Determines and
advises on taxpayer’s tax liability.
 PR:ET:01: Applies professional
ethical standards.
 PR:ET:02: Exercises integrity
and a high level of professional
judgment.
 PR:ET:03: Maintains objectivity
and independence in appearance
and fact
 PR:SE:03: Applies professional
skepticism.
 PK:IT:02: Selects and uses
appropriate business technology
tools in the workplace
 PK:BE:04: Advises on business
decisions in the context of the
legal framework.
 PR:IA:02: Evaluates the
interrelationship of an issue on
different functions of the
organization and applies concepts
and approaches within and across
functional areas to develop
integrative solutions.
 PR:PS:02: Collects, selects,
verifies, and evaluates
information relevant to the
problem.
 PR:PS:04: Generates and
evaluates alternative solutions.
 PR:PD:03: Enhances the
profession’s image/reputation.
Page 4 of 11
Content
Topics
Area
4. Capital cost allowance and eligible capital property
Learning Objectives
Levels of
Competence
4.1 Transactions between persons
not dealing at arm’s length

Determine whether persons are dealing with each
other at arm’s length and the tax consequences of
transactions between persons not dealing at arm’s
length when there is inadequate consideration.
Level 2
4.2 Tax depreciation system

Explain the rationale of the tax depreciation
system.
Level 1
4.3 Capital cost allowance

Apply the general rules of the CCA system and
explain the applicability of CCA and recapture
rules to lease option and leasing agreements.
Levels 1 and 2
4.4 Non-arm’s length acquisitions
(depreciable property)

Explain the provisions for depreciable capital
property transactions when the vendor does not
deal at arm’s length with the purchaser.
Level 2
4.5 Eligible capital property

Determine what constitutes an ECP and the
implications of disposing of an ECP.
Level 1
Examination sessions: March 2015; June 2015; September 2015
Competencies
Weighting
(%)
9%-13%
 PK:TX:02: Determines and
advises on taxpayer’s tax liability.
 PK:TX:06: Analyzes and advises
on tax planning issues.
 PK:TX:08: Evaluates and advises
on tax implications of alternative
business decisions.
 PK:IT:02: Selects and uses
appropriate business technology
tools in the workplace.
 PK:BE:02: Advises on business
decisions in the context of larger
economic and geopolitical
conditions.
 PR:PS:02: Collects, selects,
verifies, and evaluates
information relevant to the
problem.
Page 5 of 11
Content
Topics
Learning Objectives
Area
5. Income from property, income from other sources, and other deductions
Levels of
Competence
5.1 Income from property:
Introduction
 Explain the distinction between income from
property and other types of income, and the
importance of such a distinction.
Level 1
5.2 Interest
 Explain and apply the rules for the annual reporting
of interest.
Level 1
5.3 Dividends
 Determine the taxable amount of a dividend
received, and explain why the tax treatment of a
dividend paid by a Canadian corporation differs
depending on whether it is received by an individual
or by a corporation.
Level 1
5.4 Rental income
 Compute the rental income of a taxpayer, taking
into account the special rules concerning the CCA
that may be claimed.
Level 1
5.5 Shareholder benefits
 Explain why and how a shareholder is taxed on the
value of benefits received from the corporation of
which he is a shareholder, and explain the tax
consequences of loans to shareholders.
Level 2
5.6 Other income
 Identify other income sources and explain why they
are dealt with in a separate ITA subsection.
Level 1
5.7 Deductions from property
income and other deductions
 Compute net income from property using the
applicable ITA sections; explain the underlying
principles and apply the most common rules relating
to the deduction of common subdivision (e)
amounts.
Level 1
5.8 Saving for retirement
 Explain the general principles relating to registered
pension plans and registered retirement savings
plans, and determine the contribution limit.
Level 1
5.9 Attribution rules
 Describe and apply the attribution rules when
property is transferred or loaned to a
spouse/common-law partner or children under the
age of 18.
Level 2
Examination sessions: March 2015; June 2015; September 2015
Competencies
Weighting
(%)
8%-13%
 PK:TX:02: Determines and
advises on taxpayer’s tax liability.
 PK:TX:03: Ensures compliance
with all taxation reporting and
filing requirements.
 PK:TX:06: Analyzes and advises
on tax planning issues.
 PK:TX:08: Evaluates and advises
on tax implications of alternative
business decisions.
 PK:IT:02: Selects and uses
appropriate business technology
tools in the workplace.
Page 6 of 11
Content
Topics
Area
6. Capital gains and losses
Learning Objectives
Levels of
Competence
6.1 Introduction to capital gains
 Explain why capital gains and losses are treated
differently from other types of income.
Level 1
6.2 Capital property and
disposition
 Describe what types of property and what
circumstances give rise to capital gains or losses.
Levels 1 and 2
6.3 General rules for determining
taxable capital gains and
allowable capital losses
 Calculate taxable capital gains, allowable capital
losses, and the allowable capital gains reserve.
Level 1
6.4 Specific provisions for capital
gains and losses
 Describe specific rules that apply in the calculation
of capital gains and losses, including the treatment
for identical properties and depreciable property,
and the restrictions on the deduction of capital
losses for personal-use property, listed personal
property, superficial losses, and business investment
losses.
Levels 1 and 2
6.5 Special rules: principal
residence exemption, change in
use, and replacement property
 Explain the special rules for the principal residence
exemption, changes in use, and replacement
property.
Level 2
Examination sessions: March 2015; June 2015; September 2015
Competencies
Weighting
(%)
9%-12%
 PK:TX:02: Determines and
advises on taxpayer’s tax liability.
 PK:TX:03: Ensures compliance
with all taxation reporting and
filing requirements.
 PK:TX:06: Analyzes and advises
on tax planning issues.
 PK:TX:08: Evaluates and advises
on tax implications of alternative
business decisions.
 PK:IT:02: Selects and uses
appropriate business technology
tools in the workplace.
Page 7 of 11
Content
Topics
Area
7. Taxable income and tax payable — Individuals
Learning Objectives
Levels of
Competence
7.1 Deductions in computing
taxable income
 Calculate taxable income and explain the order in
which deductions must be claimed.
Levels 1 and 2
7.2 Deductions in computing
taxable income — losses
 Explain the concept of loss carryover and apply the
process to carry over losses by category.
Levels 1 and 2
7.3 Capital gains deduction
 Calculate the capital gains deduction in simple
cases.
Level 2
7.4 Computing Part I tax
 Compute tax under Part I, describe the functioning
of tax brackets, the importance of the marginal tax
rate, and the general principles of tax planning.
Level 1
7.5 Non-refundable tax credits
 Identify and apply the available non-refundable tax
credits.
Levels 1 and 2
7.6 Computing tax under Part I.2
and split income
Competencies
Weighting
(%)
9%-12%
 PK:TX:02: Determines and
advises on taxpayer’s tax liability.
 PK:TX:06: Analyzes and advises
on tax planning issues.
 PK:TX:09: Designs and advises
on international tax planning.
 PK:IT:02: Selects and uses
appropriate business technology
tools in the workplace.
Level 2
 Compute Part I.2 tax, and tax adjustments related to
split income.
Examination sessions: March 2015; June 2015; September 2015
Page 8 of 11
Content
Topics
Area
8. Taxable income and tax payable — Corporations Part 1
Learning Objectives
Levels of
Competence
8.1 Types of corporations
 Explain the principles underlying the taxation of
corporations, identify the different types of
corporations, and explain why the differences are
important.
Levels 1 and 2
8.2 Calculating net income and
taxable income
 Reconcile accounting income and net income for
tax purposes, classify the different types of income
of a corporation, and determine the taxable income.
Level 1
8.3 Federal basic tax, general rate
reduction, and tax abatement
 Compute the basic tax payable, the general rate
reduction, and the tax abatement under Part I,
identifying common deductions in this process, and
briefly explain the process of allocating taxable
income among provinces.
Levels 1 and 2
8.4 Associated corporations and
the small business deduction
 Calculate the small business deduction including
the situation of an associated corporation.
Level 1
8.5 Other deductions in calculating
tax payable
 Determine whether a corporation is eligible for the
manufacturing and processing profits deduction, the
federal political tax credit, the investment tax credit,
and the foreign tax deduction.
Level 2
Examination sessions: March 2015; June 2015; September 2015
Competencies
Weighting
(%)
8%-13%
 PK:TX:01: Determines and
advises on taxpayer’s regulatory
requirements and exposure.
 PK:TX:02: Determines and
advises on taxpayer’s tax
liability.
 PK:TX:08: Evaluates and
advises on tax implications of
alternative business decisions.
 PK:BE:08: Implements and
advises on measures to mitigate
enterprise risk.
 PR:PS:02: Collects, selects,
verifies, and evaluates
information relevant to the
problem.
Page 9 of 11
Content
Topics
Area
9. Taxable income and tax payable — Corporations Part 2
Learning Objectives
Levels of
Competence
9.1 Refundable tax on CCPC’s
investment income

Compute Part I tax payable on investment income
and explain the principles underlying the taxation
of aggregate investment income.
Level 1
9.2 Part IV tax

Compute Part IV tax payable, the balance in the
refundable dividend tax on hand (RDTOH)
account, and a dividend refund.
Level 1
9.3 Integration principle and
distribution of corporate
surpluses

Describe the principle of integration and the
effects of the distribution of corporate surpluses.
Levels 1 and 2
9.4 Capital dividend account

Compute the capital dividend account balance.
Levels 1 and 2
9.5 Incorporated and
unincorporated businesses

Evaluate the tax advantages and disadvantages of
incorporating a business and justify the decision to
incorporate or not.
Level 1
9.6 Shareholder-manager
remuneration

Determine an appropriate shareholder-manager
remuneration plan.
Level 1
Examination sessions: March 2015; June 2015; September 2015
Weighting
(%)
11%-15%
Competencies
 PK:TX:02: Determines and
advises on taxpayer’s tax liability.
 PK:TX:06: Analyzes and advises
on tax planning issues.
 PK:TX:08: Evaluates and advises
on tax implications of alternative
business decisions.
 PK:IT:02: Selects and uses
appropriate business technology
tools in the workplace.
 PK:BE:02: Advises on business
decisions in the context of larger
economic and geopolitical
conditions.
 PK:BE:08: Implements and
advises on measures to mitigate
enterprise risk.
Page 10 of 11
Content
Topics
Area
10. International taxation
Learning Objectives
Levels of
Competence
10.1 Part-year residents
 Determine the main tax consequences of a person
resident in Canada for only part of the year.
Level 1
10.2 Non-residents: Tax payable
under Part I
 Determine when a non-resident is subject to Part I
tax.
Level 1
10.3 Non-residents: Tax payable
under Part XIII
 Determine when a non-resident is subject to Part
XIII tax.
Level 2
10.4 Tax conventions
 Explain the function and importance of the tax
conventions entered into by Canada with other
countries.
Level 2
10.5 Other international tax
matters
 Explain the general concepts of transfer pricing,
international financing, and information reporting.
Level 2
10.6 Ethical concerns in
international transactions
 Identify and analyze situations that can cause
ethical problems when a client conducts
international transactions.
Level 1
Examination sessions: March 2015; June 2015; September 2015
Weighting
(%)
2%-6%
Competencies
 PK:TX:01: Determines and
advises on taxpayer’s regulatory
requirements and exposure.
 PK:TX:03: Ensures compliance
with all taxation reporting and
filing requirements.
 PK:TX:09: Designs and advises
on international tax planning.
 PR:CM:03: Communicates
information in a timely, clear, and
concise manner.
 PR:ET:01: Applies professional
ethical standards.
 PR:ET:02: Exercises integrity
and a high level of professional
judgment.
 PR:ET:03: Maintains objectivity
and independence in appearance
and fact.
 PR:ET:04: Protects the public
interest.
Page 11 of 11