I'm working through the RPL exam prep and this question came up:
You are flying from your home aerodrome to the training area. En-route there is a small township. What is the lowest altitude you may fly over the township?
Select one:
1000ft AMSL
500ft AGL
1000ft AGL
1000ft above any house within 600m of a line drawn vertically down below the aircraft.

I answered 1000ft within 600m vertically below but the answer was 1000ft AGL and referenced CAR 157

CAR 157 Para 1 says:
(1) The pilot in command of an aircraft must not fly the aircraft over:

(a) any city, town or populous area at a height lower than 1,000 feet; or

(b) any other area at a height lower than 500 feet.

Which would be correct, but, para 3 also says:
(3) A height specified in subregulation (1) is the height above the highest point of the terrain, and any object on it, within a radius of:

(a) in the case of an aircraft other than a helicopter--600 metres; or

(b) in the case of a helicopter--300 metres;

from a point on the terrain vertically below the aircraft.

So was I correct in my first answer or not? It seems to me that if you only read the first subregulation then the exam is correct but the entirety of 157 says that you have to stay above 1000ft if you are within 600m laterally of any built up areas also.

You'll find that the question asked "What is the lowest altitude you may fly over the township" with over being the operative word.