Question 1

Anne had earnings from her salary of $40,000 and a contribution to a registered retirement saving plan of $1,500. Anne's' net income would be

Accepted Answer

A)   $39,250.
B)   $40,000.
C)   $39,300.
D)   $38,500.
E)   $41,500.F) C) and E)
G) A) and C) D

Question 2

One of the legitimate methods to reduce one's taxes is tax avoidance

Accepted Answer

A) True 
 B)False

Question 3

Which of the following would result in a reduction of taxable income?

Accepted Answer

A)   portfolio income
B)   tax credits
C)   union dues
D)   business income
E)   earned incomeF) B) and C)
G) A) and C)

Question 4

A tax credit is an amount subtracted directly from the amount of taxes owed.

Accepted Answer

A) True 
 B)False

Question 5

Tax Freedom Day occurs:

Accepted Answer

A)   the time in the year when your income has paid the portion of taxes imposed by all levels of government
B)   there is no Tax Freedom Day
C)   the time in the year when your income has paid the portion of taxes imposed by the federal government
D)   the time in the year when your income has paid the portion of taxes imposed by the provincial government
E)   Any time you do not pay GST or PSTF) A) and D)
G) B) and E)

Question 6

Earnings from a limited partnership would be an example of ____________ income.

Accepted Answer

A)   earned
B)   investment
C)   portfolio
D)   net business income
E)   excludedF) All of the above
G) A) and E)

Question 7

Why are capital losses important?

Accepted Answer

They are important because they reduce o...

Question 8

Identify the correct statements 
I. Tax deductions are more valuable to a high income earner than tax credits.
II. RESPs are excellent income splitting vehicles for families with young children.
III. Students can deduct moving expenses when they move back home to take up a summer job.

Accepted Answer

A)   I and II, only
B)   II and III, only
C)   I and III, only
D)   I, II and III
E)   I onlyF) C) and E)
G) B) and C)

Question 9

Most people pay federal income tax by

Accepted Answer

A)   paying the total amount owed by April 15.
B)   filing quarterly tax payments.
C)   having amounts withheld from source.
D)   earning tax credits for various deductions.
E)   cashing in their saving.F) None of the above
G) A) and E)

Question 10

The financial planning objective is to:

Accepted Answer

A)   evade taxes.
B)   minimize taxes.
C)   maximize income.
D)   maximize after-tax cash flows.
E)   maximize tax credits.F) None of the above
G) A) and E)

Question 11

Jack sold $20,000 worth of stocks that were purchased one year ago for $15,000. He is in a 22% tax bracket. Jack's capital gains taxes are:

Accepted Answer

A)   $500.
B)   $550.
C)   $1,100.
D)   $2,500.
E)   $4,400.F) B) and C)
G) C) and D) B

Question 12

Several courses of appeal are available to taxpayers who disagree with a revenue service ruling on their tax return audit.

Accepted Answer

A) True 
 B)False

Question 13

There is a withholding on tax paid to Canadian residents on interest, dividends, rent and royalties.

Accepted Answer

A) True 
 B)False

Question 14

Contributing $2,000 to an RRSP changes the Tax Free Savings Account (TFSA)  contribution by

Accepted Answer

A)   reducing the limit by $1,000
B)   reducing the limit by $2,000
C)   reducing the limit by $3,000
D)   does not reduce the TFSA contribution limit
E)   Increases the TFSA limit by $2,000F) B) and C)
G) A) and D)

Question 15

A tax credit of $100 for a person in a 28 percent tax bracket would reduce a person's taxes by

Accepted Answer

A)   $100.
B)   $28.
C)   $72.
D)   $50.
E)   $35.F) A) and E)
G) D) and E)

Question 16

Contributions to a Tax Free Savings Account are tax deductible

Accepted Answer

A) True 
 B)False

Question 17

An exemption affects a person's tax situation by:

Accepted Answer

A)   increasing the standard deduction.
B)   increasing the taxpayer's marginal tax rate.
C)   decreasing itemized deductions.
D)   reducing the taxpayer's taxable income.
E)   increasing tax-exempt income.F) A) and E)
G) None of the above D

Question 18

What is the benefit of the Home Buyer's Plan?

Accepted Answer

The Home Buyer's Plan allows f...

Question 19

An expense that would be included in the deductions of a taxpayer is

Accepted Answer

A)   travel to work.
B)   life insurance premiums.
C)   union and professional dues.
D)   a driver's license fee.
E)   tuition fees.F) A) and D)
G) A) and E)

Question 20

A field audit requires that a taxpayer visit an auditing agent to clarify some aspect of his or her tax return.

Accepted Answer

A) True 
 B)False

Exam 3: Planning Your Tax Strategy

Anne had earnings from her salary of $40,000 and a contribution to a registered retirement saving plan of $1,500. Anne's' net income would be

Correct AnswerverifiedD

One of the legitimate methods to reduce one's taxes is tax avoidance

Correct AnswerverifiedShow Answer

Which of the following would result in a reduction of taxable income?

Correct AnswerverifiedShow Answer

A tax credit is an amount subtracted directly from the amount of taxes owed.

Correct AnswerverifiedShow Answer

Tax Freedom Day occurs:

Correct AnswerverifiedShow Answer

Earnings from a limited partnership would be an example of ____________ income.

Correct AnswerverifiedShow Answer

Why are capital losses important?

Correct AnswerverifiedThey are important because they reduce o...View AnswerShow Answer

Identify the correct statements I. Tax deductions are more valuable to a high income earner than tax credits. II. RESPs are excellent income splitting vehicles for families with young children. III. Students can deduct moving expenses when they move back home to take up a summer job.

Correct AnswerverifiedShow Answer

Most people pay federal income tax by

Correct AnswerverifiedShow Answer

The financial planning objective is to:

Correct AnswerverifiedShow Answer

Jack sold $20,000 worth of stocks that were purchased one year ago for $15,000. He is in a 22% tax bracket. Jack's capital gains taxes are:

Correct AnswerverifiedB

Several courses of appeal are available to taxpayers who disagree with a revenue service ruling on their tax return audit.

Correct AnswerverifiedShow Answer

There is a withholding on tax paid to Canadian residents on interest, dividends, rent and royalties.

Correct AnswerverifiedShow Answer

Contributing $2,000 to an RRSP changes the Tax Free Savings Account (TFSA) contribution by

Correct AnswerverifiedShow Answer

A tax credit of $100 for a person in a 28 percent tax bracket would reduce a person's taxes by

Correct AnswerverifiedShow Answer

Contributions to a Tax Free Savings Account are tax deductible

Correct AnswerverifiedShow Answer

An exemption affects a person's tax situation by:

Correct AnswerverifiedD

What is the benefit of the Home Buyer's Plan?

Correct AnswerverifiedThe Home Buyer's Plan allows f...View AnswerShow Answer

An expense that would be included in the deductions of a taxpayer is

Correct AnswerverifiedShow Answer

A field audit requires that a taxpayer visit an auditing agent to clarify some aspect of his or her tax return.

Correct AnswerverifiedShow Answer

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
They are important because they reduce o...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
D

Correct Answer
verified
The Home Buyer's Plan allows f...
View Answer

Correct Answer
verified

Correct Answer
verified