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

Your earnings this year will be $52 000 and you will have a pension plan adjustment of $8000. How much of an RRSP contribution can you make?

Tax planning involves the careful use of refundable and transferrable credits to maximize refunds.

Describe and compare tax planning and tax avoidance.

Which of the following is the correct method for starting with total income and computing taxable income?

Michael is an independent contractor for repairs and maintenance, but his customers usually provide him with the necessary tools and equipment. Michael may not be qualified as a self-employed individual.

Tax avoidance is not allowed because it is a method of bending the rules to reduce tax liability.

Filing an income tax return, even when you have no tax to pay, may increase the amount of RRSP contributions you are allowed in later years.

Total income includes all of the following except

Which of the following taxes is paid on your salary?

Expenses incurred for children's daycare can be

Sally's adjusted gross income is $38 000 and she divorced last year. She does not own a home, but has charitable contributions of $1500 and interest on her car of $2100. This year she also paid spousal support of $2000, child support of $5000, and tuition of $2600. She is allowed a basic exemption of $8000. What is Sally's taxable income?

Canadians pay taxes on the entire amount of capital gains income they receive by selling an investment at a profit.

Rohan is a student in Ontario and travelled to BC for his summer job. When in BC he worked in mining camps and his residence was over 40 kms from his actual place of employment. He spent $2,000 moving to BC and back and earned $22,000. During the remaining eight months he went to school full time. Which of the following describes his tax situation best?

If you are a married taxpayer supporting a spouse with a very low income

If you were to receive $100 000 from a corporation, the most tax-efficient way to receive it would be as

All interest and dividends received by an individual taxpayer are taxable.

A clawback is meant to reduce a particular government benefit provided to taxpayers who have income below a certain minimum amount.

Raymond just completed his 2007 personal tax returns with many tax credits claimed. This year (2010)he wants to discard his old document, but his accountant advised him that he has to keep all original receipts and records for his 2007 tax year

If you cannot apply all of your transferable tax credits to your personal tax return, which of the following can you transfer to other individuals?

Once you have reached age 60 you will be able to claim an age amount deduction.