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D. Indicate whether the following are True or False. 1. Tax evasion is illegal but tax avoidance is not 2. Canada imposes income tax on world income received by its residents as well as on Canadian source income on non-residents. Dividends from taxable Canadian corporations are subject to less ax than interest income. Taxpayers who acquire fixed income investments are required to report interest on an "annual accrual basis", regardless of whether or not the cash is actually received. 4. 5. If the interest paid to borrow funds exceeds the amount of interest earned on a debt security, the loss or difference between the two amounts is not tax deductible. Part of the carrying costs of preferred shares with a fixed dividend rate may be disallowed as a tax deduction if the carrying costs exceed the grossed up amount of the preferred dividend 6. When a company goes bankrupt and the shares become worthless, an investor may claim the ACB of the shares as a capital loss. 7. An investor can sell a security on the last day of December to incur a capital loss that can be used to offset capital gains in the following taxation year 8. 9. A RRIF may be considered as a reverse RRSP in that funds grow tax free, but a minimum amount of funds must be taken out and further contributions cannot be accepted. 10. Investment dealers face more regulation when servicing institutional dients than servicing retail clients 11. Agency traders place trades on behalf of institutional clients 12. Th e investment horizon of a trust is typically short, lasting twoor three years at most. 13. Institutional salespeople are released from the Know Your Client rules. An institutional trader that executes trades on behalf of the dealer member is known as a liability trader 14

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