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

Melanie, a homeowner, has mortgage interest of $3000, RRSP contributions of $1500, and charitable contributions of $500. According to her filing status, a basic personal deduction of $5000 is allowed. How much should Melanie deduct on her tax return?

Interest expense paid on home loans and car loans is deductible from your income tax.

RRSP rules limit a taxpayer's contributions to the higher of 18 percent of total income or a maximum amount of $25 000.

Tax credits are used to reduce tax

A tax credit is available to those supporting a spouse who had low earnings during the year.

Tuition, pension, and age amount deductions can be transferred to a spouse if you have no tax to pay.

Tax planning involves activities and transactions that will eliminate taxes where possible.

Total amount of $10 000 interest will pay higher taxes than total amount of $10 000 eligible dividends.

Legal methods of reducing your taxes include all of the following except

Even if you have no tax to pay it is beneficial to file a tax return because

Which of the following income is not taxable income?

The branch of Canada's government that administers the federal tax system is called

Which of the following would produce the largest financial benefit to a tax payer who earns $96 000 and is in the forty percent marginal tax bracket and the twenty five percent average tax bracket? Assume that all items are options of equal importance.

Which of the following conditions will not reduce your taxes in any way?

Use of Financial Calculator TI BA II Plus required. Miranda is 35 and her tax planning creates opportunities to receive $1800 in tax rebates each year. She uses this rebate to partially fund her RRSP contributions. If she can earn a 7 percent return, how much extra retirement savings will she have at 65?

When must self-employed individuals file their income tax returns by?