Question 1

Richard sold $20,000 worth of stocks that were purchased one year ago for $18,000. He is in a 22% tax bracket. Jack's capital gains taxes are:

Accepted Answer

A)  $220. 
B)  $440. 
C)  $2,000. 
D)  $110. 
E)  there is no tax on capital gains. 
A)  $220. 
B)  $440. 
C)  $2,000. 
D)  $110. 
E)  there is no tax on capital gains.

Question 2

Which of the following is an example of a tax credit?

Accepted Answer

A)  mortgage interest 
B)  amounts withheld for social insurance 
C)  individual retirement account contributions 
D)  caregiver and medical expenses 
E)  net business income 
A)  mortgage interest 
B)  amounts withheld for social insurance 
C)  individual retirement account contributions 
D)  caregiver and medical expenses 
E)  net business income

Question 3

The principal purpose of taxes is to control economic conditions.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  credit 
B)  exemption 
C)  deduction 
D)  exclusion 
E)  shelter 
A)  credit 
B)  exemption 
C)  deduction 
D)  exclusion 
E)  shelter

Question 5

Tax assistance from an attorney is less common than using a tax service.

Accepted Answer

A) True 
 B)False

Question 6

Tax Free Savings Accounts have all the following characteristics except

Accepted Answer

A)  The contribution limit is $5,000 per annum regardless of any amounts contributed to an RRSP/RPP. 
B)  The $5,000 limit is indexed to the CPI and increases in multiples of $500. 
C)  Contributions to a TFSA are tax deductable 
D)  Any unused contribution room can be carried forward. 
E)  Amounts can be withdrawn at any time and any amounts withdrawn can be re-contributed in the same year if one still has contribution room left over. 
A)  The contribution limit is $5,000 per annum regardless of any amounts contributed to an RRSP/RPP. 
B)  The $5,000 limit is indexed to the CPI and increases in multiples of $500. 
C)  Contributions to a TFSA are tax deductable 
D)  Any unused contribution room can be carried forward. 
E)  Amounts can be withdrawn at any time and any amounts withdrawn can be re-contributed in the same year if one still has contribution room left over.

Question 7

There is no significant difference between a federal tax credit and a federal tax deduction.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a non-refundable tax credit?

Accepted Answer

A)  Tuition and education amount 
B)  GST and PST paid on purchases 
C)  Moving expenses 
D)  Life insurance premiums 
E)  Basic personal amount 
A)  Tuition and education amount 
B)  GST and PST paid on purchases 
C)  Moving expenses 
D)  Life insurance premiums 
E)  Basic personal amount

Question 9

To help you cope with taxes, common goals related to tax planning include all the following except:

Accepted Answer

A)  Knowing the current tax laws and regulations that affect you 
B)  Maintaining complete and appropriate tax records. 
C)  Making employment and purchase decisions that leave you with the greatest after-tax cash flows and net wealth 
D)  Making investment decisions that leave you with the greatest after-tax cash flows and net wealth 
E)  Minimizing taxes 
A)  Knowing the current tax laws and regulations that affect you 
B)  Maintaining complete and appropriate tax records. 
C)  Making employment and purchase decisions that leave you with the greatest after-tax cash flows and net wealth 
D)  Making investment decisions that leave you with the greatest after-tax cash flows and net wealth 
E)  Minimizing taxes

Question 10

A tax credit of $50 for a person in a 28 percent tax bracket would reduce a person's taxes by

Accepted Answer

A)  $10. 
B)  $28. 
C)  $14. 
D)  $50. 
E)  $35. 
A)  $10. 
B)  $28. 
C)  $14. 
D)  $50. 
E)  $35.

Question 11

Beginning in 2009 Canadian residents 18 and older are allowed to contribute _________ per year to a Tax Free Savings Account:

Accepted Answer

A)  $1,000 
B)  $2,000 
C)  $3,000 
D)  $4,000 
E)  $5,000 
A)  $1,000 
B)  $2,000 
C)  $3,000 
D)  $4,000 
E)  $5,000

Question 12

Winning the lottery 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)  increasing tax-exempt income. 
E)  having no influence at all on taxable income. 
A)  increasing the standard deduction. 
B)  increasing the taxpayer's marginal tax rate. 
C)  decreasing itemized deductions. 
D)  increasing tax-exempt income. 
E)  having no influence at all on taxable income.

Question 13

Phillip Marnier had earnings from his salary of $40,000, interest on savings of $700, and a contribution to a registered retirement saving plan of $1,500. Phillip's net income would be

Accepted Answer

A)  $39,200. 
B)  $40,000. 
C)  $39,300. 
D)  $38,500. 
E)  $41,500. 
A)  $39,200. 
B)  $40,000. 
C)  $39,300. 
D)  $38,500. 
E)  $41,500.

Question 14

An example of a tax-exempt investment is

Accepted Answer

A)  interest on Canada savings bonds. 
B)  dividends from corporate stock. 
C)  a gain on the sale of your home. 
D)  earnings from a mutual fund. 
E)  interest on corporate bonds. 
A)  interest on Canada savings bonds. 
B)  dividends from corporate stock. 
C)  a gain on the sale of your home. 
D)  earnings from a mutual fund. 
E)  interest on corporate bonds.

Question 15

The Tax Free Savings Account (TFSA) contribution limit

Accepted Answer

A)  is fixed at $5,000/year 
B)  will increase at a rate of 10% per year 
C)  is indexed to the CPI and increases in multiples of $500 
D)  varies by an individual's income 
E)  decreases with increased RRSP contributions in the same year 
A)  is fixed at $5,000/year 
B)  will increase at a rate of 10% per year 
C)  is indexed to the CPI and increases in multiples of $500 
D)  varies by an individual's income 
E)  decreases with increased RRSP contributions in the same year

Question 16

Jeffrey is a self-employed carpenter. He bills his clients $60,000 a year. Total business expenses amount to $10,000 a year. His only eligible income tax deduction is $5,000 for an RRSP contribution. If the first $36,000 of taxable income is taxed by the Federal Government at a rate of 15% and levels up to approximately $70,000 are taxed at 22%, what is his federal tax liability before considering tax credits?

Accepted Answer

A)  $5,760 
B)  $6,750 
C)  $7,380 
D)  $9,900 
E)  $12,500 
A)  $5,760 
B)  $6,750 
C)  $7,380 
D)  $9,900 
E)  $12,500

Question 17

Income that is not subject to income tax includes:

Accepted Answer

A)  the GST/HST rebate. 
B)  the Canada child tax benefit 
C)  gifts. 
D)  lottery winnings. 
E)  GST/HST rebates, Canada Child Tax benefits, gifts, and lottery winnings are not subject to income tax. 
A)  the GST/HST rebate. 
B)  the Canada child tax benefit 
C)  gifts. 
D)  lottery winnings. 
E)  GST/HST rebates, Canada Child Tax benefits, gifts, and lottery winnings are not subject to income tax.

Question 18

A tax on the value of automobiles, boats, or furniture can also be referred to as an investment tax.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following would be excluded from total income to obtain net income?

Accepted Answer

A)  contributions to RPPs 
B)  mortgage interest 
C)  child support payments 
D)  foreign income exclusion 
E)  charitable contributions 
A)  contributions to RPPs 
B)  mortgage interest 
C)  child support payments 
D)  foreign income exclusion 
E)  charitable contributions

Question 20

Chelsea had earnings from her salary of $50,000, interest on savings of $2,000, and a contribution to a registered retirement saving plan of $2,000. Chelsea's net income would be

Accepted Answer

A)  $50,000. 
B)  $48,000. 
C)  $52,000. 
D)  $46,000. 
E)  $49,500. 
A)  $50,000. 
B)  $48,000. 
C)  $52,000. 
D)  $46,000. 
E)  $49,500.

Richard sold $20,000 worth of stocks that were purchased one year ago for $18,000. He is in a 22% tax bracket. Jack's capital gains taxes are:

Which of the following is an example of a tax credit?

The principal purpose of taxes is to control economic conditions.

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

Tax assistance from an attorney is less common than using a tax service.

Tax Free Savings Accounts have all the following characteristics except

There is no significant difference between a federal tax credit and a federal tax deduction.

Which of the following is a non-refundable tax credit?

To help you cope with taxes, common goals related to tax planning include all the following except:

A tax credit of $50 for a person in a 28 percent tax bracket would reduce a person's taxes by

Beginning in 2009 Canadian residents 18 and older are allowed to contribute _________ per year to a Tax Free Savings Account:

Winning the lottery affects a person's tax situation by

Phillip Marnier had earnings from his salary of $40,000, interest on savings of $700, and a contribution to a registered retirement saving plan of $1,500. Phillip's net income would be

An example of a tax-exempt investment is

The Tax Free Savings Account (TFSA) contribution limit

Income that is not subject to income tax includes:

A tax on the value of automobiles, boats, or furniture can also be referred to as an investment tax.

Which of the following would be excluded from total income to obtain net income?

Chelsea had earnings from her salary of $50,000, interest on savings of $2,000, and a contribution to a registered retirement saving plan of $2,000. Chelsea's net income would be

Personal Financial Planning: An Introduction

Money Management Strategy: Financial Statements and Budgeting

The Banking Services of Financial Institutions

Introduction to Consumer Credit

Choosing a Source Credit: the Costs of Credit Alternatives

The Finances of Housing

Home and Automobile Insurance

Life, Health, and Disability Insurance

Fundamentals of Investing

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

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Exam 3: Planning Your Tax Strategy

Richard sold $20,000 worth of stocks that were purchased one year ago for $18,000. He is in a 22% tax bracket. Jack's capital gains taxes are:

Which of the following is an example of a tax credit?

The principal purpose of taxes is to control economic conditions.

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

Tax assistance from an attorney is less common than using a tax service.

Tax Free Savings Accounts have all the following characteristics except

There is no significant difference between a federal tax credit and a federal tax deduction.

Which of the following is a non-refundable tax credit?

To help you cope with taxes, common goals related to tax planning include all the following except:

A tax credit of $50 for a person in a 28 percent tax bracket would reduce a person's taxes by

Beginning in 2009 Canadian residents 18 and older are allowed to contribute _________ per year to a Tax Free Savings Account:

Winning the lottery affects a person's tax situation by

Phillip Marnier had earnings from his salary of $40,000, interest on savings of $700, and a contribution to a registered retirement saving plan of $1,500. Phillip's net income would be

An example of a tax-exempt investment is

The Tax Free Savings Account (TFSA) contribution limit

Income that is not subject to income tax includes:

A tax on the value of automobiles, boats, or furniture can also be referred to as an investment tax.

Which of the following would be excluded from total income to obtain net income?

Chelsea had earnings from her salary of $50,000, interest on savings of $2,000, and a contribution to a registered retirement saving plan of $2,000. Chelsea's net income would be

Personal Financial Planning: An Introduction

Money Management Strategy: Financial Statements and Budgeting

The Banking Services of Financial Institutions

Introduction to Consumer Credit

Choosing a Source Credit: the Costs of Credit Alternatives

The Finances of Housing

Home and Automobile Insurance

Life, Health, and Disability Insurance

Fundamentals of Investing

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

Filters