Question 1

Employee contributions to qualified registered pension plans (RPPs)are deducted from total income to calculate taxable income.

Accepted Answer

A) True 
 B)False

Question 2

For qualified individuals, a contribution to a registered retirement savings plan (RRSP) will be

Accepted Answer

A)  a tax credit.
B)  a deduction from total income.
C)  an employment expense.
D)  a deduction from federal tax payable.

Question 3

Fillipe is in the forty percent marginal tax bracket and has a variety of income sources. Which of the following will he owe the least tax for?

Accepted Answer

A)  $1000 interest income from bonds
B)  $1000 dividend income
C)  $1000 award from his company
D)  $2000 capital gain

Question 4

Which of the following is not an acceptable method of reducing your tax bill?

Accepted Answer

A)  Taking a loan for investment purposes and deducting the interest
B)  Increasing your contributions to tax-advantaged retirement accounts
C)  Using as many deductions as possible to reduce your marginal tax rate
D)  Deducting employment expenses you were reimbursed for

Question 5

If a stock was purchased for $3000 in January 2003 and is sold in December 2003 for $4000, what is the taxable result?

Accepted Answer

A)  Capital gain of $1000 and taxable income of $500
B)  Business income of $1000 and taxable amount of $1000
C)  Capital gain of $1000 and taxable income of $1000
D)  Capital income of $1000 and taxable capital of $500

Question 6

The tax method that uses the principle of taxing those who earn more at higher rates is called

Accepted Answer

A)  equalization.
B)  socio-economic.
C)  progressive.
D)  regressive.

Question 7

If you are a Certified Financial Planner and you pay $500 to the association every year for membership, you can claim this amount on your personal tax return as

Accepted Answer

A)  a professional tax credit.
B)  an eligible tax credit.
C)  an employment expense.
D)  union/professional dues.

Question 8

Your earnings for the year are $42 000. How much of an RRSP contribution can you make?

Accepted Answer

A)  $5670
B)  $4200
C)  $7560
D)  Insufficient information

Question 9

Knowledge of tax laws can help you conserve your income.

Accepted Answer

A) True 
 B)False

Question 10

The most efficient way to reduce taxes is to

Accepted Answer

A)  use non-refundable tax credits first.
B)  use refundable tax credits first.
C)  transfer transferrable tax credits to the highest income earning spouse.
D)  carry forward last year's unused RRSP contributions.

Question 11

Items such as registered retirement savings plans (RRSPs) contributions, moving expenses, and student loan interest payments will result in

Accepted Answer

A)  a reduction in tax owing.
B)  income reductions.
C)  tax credits.
D)  taxable income.

Question 12

You will pay less tax on dividends received because the corporation paying the dividend to you has already paid some tax on this money.

Accepted Answer

A) True 
 B)False

Question 13

Comment on receiving a large tax refund. Is it a good use of your funds considering present value concepts? Does the government pay you interest? What can you do to change your withholding or recalculate it? If you received a large refund, what would you use it for?

Accepted Answer

A large refund is not a prudent use of f...

Question 14

Describe how taxes affect your personal budget, income statement, and balance sheet.

Accepted Answer

This is a subjective question. Taxes red...

Question 15

Tuition, education expenses, and charitable donations can be carried forward to reduce taxes in future years.

Accepted Answer

A) True 
 B)False

Question 16

An acceptable method of reducing your taxable income would be

Accepted Answer

A)  selling bonds to purchase stocks to change income from interest to dividends.
B)  deducting gasoline expenses incurred while driving back and forth to your office from home.
C)  deducting the cost of investment advice you never received.
D)  deducting life insurance premiums as an investment expense.

Question 17

Taxpayers who have high taxable incomes may have some or all of their social assistance payments clawed back.

Accepted Answer

A) True 
 B)False

Question 18

Jerome is recently divorced and has two children that live with his ex-wife. What deductions should Jerome claim on his tax return?

Accepted Answer

A)  Child support payments
B)  Spousal support payments
C)  Caregiver deduction
D)  Child care expenses

Question 19

Which of the following incomes are taxed at a lower rate?

Accepted Answer

A)  Award proceeds
B)  Interest income
C)  Rent received
D)  Dividends

Question 20

You have to file a personal tax return by April 30 each year only if Canada Revenue Agency sent you a request to file.

Accepted Answer

A) True 
 B)False

Exam 4: Tools for Financial Planning - Using Tax Concepts for Planning

Describe how taxes affect your personal budget, income statement, and balance sheet.

Correct AnswerverifiedThis is a subjective question. Taxes red...View AnswerShow Answer

The tax method that uses the principle of taxing those who earn more at higher rates is called

Correct AnswerverifiedShow Answer

Comment on receiving a large tax refund. Is it a good use of your funds considering present value concepts? Does the government pay you interest? What can you do to change your withholding or recalculate it? If you received a large refund, what would you use it for?

Correct AnswerverifiedA large refund is not a prudent use of f...View AnswerShow Answer

Jerome is recently divorced and has two children that live with his ex-wife. What deductions should Jerome claim on his tax return?

Correct AnswerverifiedShow Answer

Items such as registered retirement savings plans (RRSPs) contributions, moving expenses, and student loan interest payments will result in

Correct AnswerverifiedShow Answer

Taxpayers who have high taxable incomes may have some or all of their social assistance payments clawed back.

Correct AnswerverifiedShow Answer

Which of the following is not an acceptable method of reducing your tax bill?

Correct AnswerverifiedShow Answer

You will pay less tax on dividends received because the corporation paying the dividend to you has already paid some tax on this money.

Correct AnswerverifiedShow Answer

If you are a Certified Financial Planner and you pay $500 to the association every year for membership, you can claim this amount on your personal tax return as

Correct AnswerverifiedShow Answer

If a stock was purchased for $3000 in January 2003 and is sold in December 2003 for $4000, what is the taxable result?

Correct AnswerverifiedShow Answer

Employee contributions to qualified registered pension plans (RPPs)are deducted from total income to calculate taxable income.

Correct AnswerverifiedShow Answer

An acceptable method of reducing your taxable income would be

Correct AnswerverifiedShow Answer

Knowledge of tax laws can help you conserve your income.

Correct AnswerverifiedShow Answer

You have to file a personal tax return by April 30 each year only if Canada Revenue Agency sent you a request to file.

Correct AnswerverifiedShow Answer

Which of the following incomes are taxed at a lower rate?

Correct AnswerverifiedShow Answer

For qualified individuals, a contribution to a registered retirement savings plan (RRSP) will be

Correct AnswerverifiedShow Answer

Tuition, education expenses, and charitable donations can be carried forward to reduce taxes in future years.

Correct AnswerverifiedShow Answer

Fillipe is in the forty percent marginal tax bracket and has a variety of income sources. Which of the following will he owe the least tax for?

Correct AnswerverifiedShow Answer

Your earnings for the year are $42 000. How much of an RRSP contribution can you make?

Correct AnswerverifiedShow Answer

The most efficient way to reduce taxes is to

Correct AnswerverifiedShow Answer

Correct Answer
verified
This is a subjective question. Taxes red...
View Answer

Correct Answer
verified

Correct Answer
verified
A large refund is not a prudent use of f...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified