PERSONAL FINANCE CANADIAN 6TH EDITION BY KAPOOR – TEST BANK

 

 

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Sample Test

03
Student: _______________________________________________________________________________________
1. The main purpose of taxes is to
A. create jobs
B. reduce the chances of inflation.
C. generate revenue for funding government programs.
D. discourage use of certain goods and services.
E. decrease competition from foreign companies.
2. The use of legitimate methods to reduce one’s taxes is tax ____________.
A. evasion
B. avoidance
C. exemptions
D. deferred techniques
E. reductions
3. The ______________ property tax is based on the value of land and buildings.
A. personal
B. real estate
C. direct
D. proportional
E. regressive
4. An exemption affects a person’s tax situation by:
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 taxexempt
income.
5. Taxable income is used to compute a person’s
A. exemptions.
B. income tax.
C. deductions.
D. tax credit.
E. exclusions.
6. Which of the following would result in a reduction of taxable income?
A. portfolio income
B. tax credits
C. union dues
D. business income
E. earned income
7. Money received by an individual for personal effort is ____________ income.
A. earned or employment investment
B. investment
C. portfolio
D. excluded
E. capital gains
8. Money received in the form of dividends or interest is ____________ income.
A. business income
B. earned or employment
C. excluded
D. capital gain
E. investment
9. Earnings from a limited partnership would be an example of ____________ income.
A. earned
B. investment
C. portfolio
D. net business income
E. excluded
10. Income that is not subject to income tax includes:
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.
11. Which of the following would be excluded from total income to obtain net income?
A. contributions to RPPs
B. mortgage interest
C. child support payments
D. foreign income exclusion
E. charitable contributions
12. 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
A. $39,200.
B. $40,000.
C. $39,300.
D. $38,500.
E. $41,500.
13. 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:
A. $500.
B. $550.
C. $1,100.
D. $2,500.
E. $4,400.
14. Reductions from gross income for such items as registered retirement account contributions and
RESP payments will result in
A. business income
B. taxable income.
C. earned income.
D. net income.
E. total exclusions.
15. Winning the lottery affects a person’s tax situation by
A. increasing the standard deduction.
B. increasing the taxpayer’s marginal tax rate.
C. decreasing itemized deductions.
D. increasing taxexempt
income.
E. having no influence at all on taxable income.
16. Which of the following is a standard tax credit?
A. itemized deductions
B. withholding
C. an earned tax credit
D. the basic personal amount
E. capital gains
17. ____________ are expenses that a taxpayer is allowed to deduct from total income.
A. Exemptions
B. Exclusions
C. Deductions
D. Tax credits
E. Passive income
18. An expense that would be included in the deductions of a taxpayer is
A. travel to work.
B. life insurance premiums.
C. union and professional dues.
D. a driver’s license fee.
E. tuition fees.
19. The basic personal amount is
A. the standard deduction.
B. a tax credit.
C. an itemized deduction.
D. an exclusion.
E. an exemption.
20. A tax ____________ is an amount subtracted directly from the amount of taxes owed.
A. credit
B. exemption
C. deduction
D. exclusion
E. shelter
21. Which of the following is an example of a tax credit?
A. mortgage interest
B. amounts withheld for social insurance
C. individual retirement account contributions
D. caregiver and medical expenses
E. net business income
22. A tax credit of $50 for a person in a 28 percent tax bracket would reduce a person’s taxes by
A. $10.
B. $28.
C. $14.
D. $50.
E. $35.
23. Most people pay federal income tax by
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.
24. Estimated quarterly tax installments must be made by those who
A. are employed in a foreign country.
B. receive dividends.
C. work for the government.
D. owe yearend
taxes of over $2,000 for both the current year and either of the two preceding y years.
E. have been caught committing fraud.
25. Which of the following people is least likely to have to file a federal income tax return?
A. a person earning $8,750
B. a person earning $10, 750
C. a person earning less than $9,600
D. a person over age 65
E. a college student
26. A person with a total tax liability of $4,350 and withholding of federal taxes of $3,975 would:
A. receive a refund of $4,550.
B. owe $8,325.
C. owe $375.
D. receive a refund of $8,325.
E. receive a refund of $375.
27. The financial planning objective is to:
A. evade taxes.
B. minimize taxes.
C. maximize income.
D. maximize aftertax
cash flows.
E. maximize tax credits.
28. Jennifer made $2,000 worth of charitable donations. Her total income is $36,000 and she is in the
22% federal tax bracket. What is her charitable donations tax credit?
A. $320
B. $440
C. $552
D. $2,000
E. $5,760
29. Which type of tax expert would be of most value when you have a difference of opinion with the tax
department?
A. an enrolled agent
B. a nationallychartered
tax preparer
C. a CA
D. a tax accountant
E. a tax attorney
30. Making use of legitimate methods to reduce one’s taxes is called tax ____________.
A. evasion
B. planning
C. exemptions
D. deferred techniques
E. reductions
31. An example of a nonrefundable
tax credit is
A. interest on a credit card or charge account.
B. certain jobrelated
travel expenses.
C. the cost of commuting to work.
D. life insurance premiums.
E. student loan interest fees.
32. An example of a taxexempt
investment is
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.
33. Capital gains refer to
A. taxexempt
investments.
B. profits from the sale of an investment asset.
C. gains from the sale of capital assets
D. earnings from investments such as dividends or interest.
E. taxdeferred
investments.
34. Sheira Harvey worked in Poland for part of the year and earned $50,000 while she was there. This
income will not be included in her income for the year. This represents:
A. A deduction
B. An exclusion
C. An exemption
D. A tax credit
E. An increase of income
35. An RPP differs from an RRSP in that
A. earnings on the RPP are tax free after five years.
B. contributions may exceed $2,000 in the RRSP.
C. an RRSP is set up by an employer for an employee.
D. An RPP is set up by an employer for an employee.
E. funds are only to be used for education expenses
36. An RRSP, RPP, and IPP are examples of
A. taxexempt
retirement plans.
B. taxdeferred
retirement plans.
C. capital gains.
D. selfemployment
insurance programs.
E. jobrelated
expenses that are tax deductible.
37. “Grossedup”
Canadian dividends are multiplied by what amount in order to determine the level of
taxable dividends?
A. 15%
B. 18.97%
C. 45%
D. 50%
E. 60%
38. Which of the following is a nonrefundable
tax credit?
A. Tuition and education amount
B. GST and PST paid on purchases
C. Moving expenses
D. Life insurance premiums
E. Basic personal amount
39. Jeffrey is a selfemployed
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?
A. $5,760
B. $6,750
C. $7,380
D. $9,900
E. $12,500
40. 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.
A. I and II, only
B. II and III, only
C. I and III, only
D. I, II and III
E. I only
41. To help you cope with taxes, common goals related to tax planning include all the following except:
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 aftertax
cash flows and
net wealth
D. Making investment decisions that leave you with the greatest aftertax
cash flows and net wealth
E. Minimizing taxes
42. Tax Freedom Day occurs:
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 PST
43. 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
A. $39,250.
B. $40,000.
C. $39,300.
D. $38,500.
E. $41,500.
44. 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
A. $50,000.
B. $48,000.
C. $52,000.
D. $46,000.
E. $49,500.
45. 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:
A. $220.
B. $440.
C. $2,000.
D. $110.
E. there is no tax on capital gains.
46. Winning a $10,000 the lottery affects a person’s tax situation by
A. increasing the standard deduction by $10,000.
B. increasing the taxpayer’s marginal tax rate to 50%.
C. is taxed at the same rate as capital gains.
D. is not taxed.
E. is added to income and taxed accordingly.
47. A tax credit of $100 for a person in a 28 percent tax bracket would reduce a person’s taxes by
A. $100.
B. $28.
C. $72.
D. $50.
E. $35.
48. Tax records should be kept for a minimum of __________ rears from the date you receive your
notice of assessment
A. you are not required to keep your tax records.
B. until age 65
C. three years for all records
D. six years for all records
E. three years, six years, or indefinitely, depending on the type of record
49. Beginning in 2009 Canadian residents 18 and older are allowed to contribute _________ per year to a
Tax Free Savings Account:
A. $1,000
B. $2,000
C. $3,000
D. $4,000
E. $5,000
50. Contributing $2,000 to an RRSP changes the Tax Free Savings Account (TFSA) contribution by
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 $2,000
51. The Tax Free Savings Account (TFSA) contribution limit
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
52. Tax Free Savings Accounts have all the following characteristics except
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 recontributed
in the same
year if one still has contribution room left over.
53. In 2009, Glenn is allowed to contribute $5,000 to a TFSA. He contributes $2,000 for that year. If he
withdraws $1,000 the same year from the TFSA account, the following year:
A. $3,000 contribution room is added to the 2010 TFSA limit
B. the TFSA limit for 2010 is unchanged
C. the TFSA limit for 2010 is reduced by $1,000
D. $4,000 contribution room is added to the 2010 TFSA limit
E. $1,000 is added to taxable income for 2010
54. A tax credit of $50 for a person in a 28 percent tax bracket would reduce a person’s taxes by
A. $10.
B. $28.
C. $14.
D. $50.
E. $35.
55. Taxes are not only considered in financial planning in April.
True False
56. The principal purpose of taxes is to control economic conditions.
True False
57. A province may impose a personal property tax.
True False
58. Realestate
property taxes are significant but not a major source of revenue for local governments.
True False
59. A tax credit is an amount subtracted directly from the amount of taxes owed.
True False
60. A tax on the value of automobiles, boats, or furniture can also be referred to as an investment tax.
True False
61. An estate tax is imposed on the value of an individual’s property at the time of his or her death.
True False
62. Taxable income is the total earnings of a person.
True False
63. There is a withholding on tax paid to Canadian residents on interest, dividends, rent and royalties.
True False
64. Income from a partnership is included under net business income.
True False
65. Deductions are amounts that a taxpayer is allowed to deduct from taxable income.
True False
66. There is no significant difference between a federal tax credit and a federal tax deduction.
True False
67. Most taxpayers have to file quarterly payments of estimated amounts owed for taxes.
True False
68. Tax assistance from an attorney is less common than using a tax service.
True False
69. A field audit requires that a taxpayer visit an auditing agent to clarify some aspect of his or her tax
return.
True False
70. Several courses of appeal are available to taxpayers who disagree with a revenue service ruling on
their tax return audit.
True False
71. Tax evasion refers to illegal actions to reduce one’s taxes.
True False
72. If you are a selfemployed
individual, you do have to make both employee and employer
contributions to the CPP or QPP.
True False
73. Taxexempt
income has a greater financial benefit than taxdeferred
income.
True False
74. A tax credit is an amount subtracted directly from the amount of taxes owed.
True False
75. Taxes are only considered in financial planning in April.
True False
76. About onethird
of each dollar you earn goes towards income taxes
True False
77. One of the legitimate methods to reduce one’s taxes is tax evasion
True False
78. One of the legitimate methods to reduce one’s taxes is tax avoidance
True False
79. Contributions to a Tax Free Savings Account are tax deductible
True False
80. How is taxable income computed?
81. Cameron Nelson wants to complete his own federal income tax return. He has several questions
about the tax form to use and what items should be reported as income. What sources of assistance
would you recommend for Cameron?
82. What is the difference between the marginal tax rate and the average tax rate? In most cases, which
rate is less? If your taxable income in 2004 was $50,000, what would be your federal taxes, marginal
tax rate and average tax rate?
83. What is the benefit of the Home Buyer’s Plan?
84. Why are capital losses important?
85. List the components that should be included in a good tax recordkeeping system.
86. According to the textbook, for which groups would a TFSA be particularly beneficial and why?
03 KEY
1. (p. 74) The main purpose of taxes is to
A. create jobs
B. reduce the chances of inflation.
C. generate revenue for funding government programs.
D. discourage use of certain goods and services.
E. decrease competition from foreign companies.
Difficulty: Easy
Gradable: automatic
Kapoor Chapter
03 #1
Learning Objective: 1
2. (p. 96) The use of legitimate methods to reduce one’s taxes is tax ____________.
A. evasion
B. avoidance
C. exemptions
D. deferred techniques
E. reductions
Difficulty: Easy
Gradable: automatic
Kapoor Chapter
03 #2
Learning Objective: 3
3. (p. 74) The ______________ property tax is based on the value of land and buildings.
A. personal
B. real estate
C. direct
D. proportional
E. regressive
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #3
Learning Objective: 2
4. (p. 79) An exemption affects a person’s tax situation by:
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 taxexempt
income.
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #4
Learning Objective: 2
5. (p. 79) Taxable income is used to compute a person’s
A. exemptions.
B. income tax.
C. deductions.
D. tax credit.
E. exclusions.
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #5
Learning Objective: 2
6. (p. 78) Which of the following would result in a reduction of taxable income?
A. portfolio income
B. tax credits
C. union dues
D. business income
E. earned income
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #6
Learning Objective: 2
7. (p. 76) Money received by an individual for personal effort is ____________ income.
A. earned or employment investment
B. investment
C. portfolio
D. excluded
E. capital gains
Difficulty: Easy
Gradable: automatic
Kapoor Chapter
03 #7
Learning Objective: 2
8. (p. 76) Money received in the form of dividends or interest is ____________ income.
A. business income
B. earned or employment
C. excluded
D. capital gain
E. investment
Difficulty: Easy
Gradable: automatic
Kapoor Chapter
03 #8
Learning Objective: 2
9. (p. 76) Earnings from a limited partnership would be an example of ____________ income.
A. earned
B. investment
C. portfolio
D. net business income
E. excluded
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #9
Learning Objective: 2
10. (p. 77) Income that is not subject to income tax includes:
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.
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #10
Learning Objective: 2
11. (p. 77) Which of the following would be excluded from total income to obtain net income?
A. contributions to RPPs
B. mortgage interest
C. child support payments
D. foreign income exclusion
E. charitable contributions
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #11
Learning Objective: 2
12. (p. 78) 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
A. $39,200.
B. $40,000.
C. $39,300.
D. $38,500.
E. $41,500.
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #12
Learning Objective: 2
13. (p. 79) 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:
A. $500.
B. $550.
C. $1,100.
D. $2,500.
E. $4,400.
Difficulty: Hard
Gradable: automatic
Kapoor Chapter
03 #13
Learning Objective: 2
14. (p. 78) Reductions from gross income for such items as registered retirement account contributions and
RESP payments will result in
A. business income
B. taxable income.
C. earned income.
D. net income.
E. total exclusions.
Difficulty: Hard
Gradable: automatic
Kapoor Chapter
03 #14
Learning Objective: 2
15. (p. 80) Winning the lottery affects a person’s tax situation by
A. increasing the standard deduction.
B. increasing the taxpayer’s marginal tax rate.
C. decreasing itemized deductions.
D. increasing taxexempt
income.
E. having no influence at all on taxable income.
Difficulty: Hard
Gradable: automatic
Kapoor Chapter
03 #15
Learning Objective: 2
16. (p. 80) Which of the following is a standard tax credit?
A. itemized deductions
B. withholding
C. an earned tax credit
D. the basic personal amount
E. capital gains
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #16
Learning Objective: 2
17. (p. 78) ____________ are expenses that a taxpayer is allowed to deduct from total income.
A. Exemptions
B. Exclusions
C. Deductions
D. Tax credits
E. Passive income
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #17
Learning Objective: 2
18. (p. 78) An expense that would be included in the deductions of a taxpayer is
A. travel to work.
B. life insurance premiums.
C. union and professional dues.
D. a driver’s license fee.
E. tuition fees.
Difficulty: Easy
Gradable: automatic
Kapoor Chapter
03 #18
Learning Objective: 2
19. (p. 84) The basic personal amount is
A. the standard deduction.
B. a tax credit.
C. an itemized deduction.
D. an exclusion.
E. an exemption.
Difficulty: Hard
Gradable: automatic
Kapoor Chapter
03 #19
Learning Objective: 2
20. (p. 80) A tax ____________ is an amount subtracted directly from the amount of taxes owed.
A. credit
B. exemption
C. deduction
D. exclusion
E. shelter
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #20
Learning Objective: 2
21. (p. 80) Which of the following is an example of a tax credit?
A. mortgage interest
B. amounts withheld for social insurance
C. individual retirement account contributions
D. caregiver and medical expenses
E. net business income
Difficulty: Hard
Gradable: automatic
Kapoor Chapter
03 #21
Learning Objective: 2
22. (p. 80) A tax credit of $50 for a person in a 28 percent tax bracket would reduce a person’s taxes by
A. $10.
B. $28.
C. $14.
D. $50.
E. $35.
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #22
Learning Objective: 2
23. (p. 83) Most people pay federal income tax by
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.
Difficulty: Easy
Gradable: automatic
Kapoor Chapter
03 #23
Learning Objective: 2
24. (p. 85) Estimated quarterly tax installments must be made by those who
A. are employed in a foreign country.
B. receive dividends.
C. work for the government.
D. owe yearend
taxes of over $2,000 for both the current year and either of the two preceding y years.
E. have been caught committing fraud.
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #24
Learning Objective: 2
25. (p. 91) Which of the following people is least likely to have to file a federal income tax return?
A. a person earning $8,750
B. a person earning $10, 750
C. a person earning less than $9,600
D. a person over age 65
E. a college student
Difficulty: Hard
Gradable: automatic
Kapoor Chapter
03 #25
Learning Objective: 2
26. (p. 83) A person with a total tax liability of $4,350 and withholding of federal taxes of $3,975 would:
A. receive a refund of $4,550.
B. owe $8,325.
C. owe $375.
D. receive a refund of $8,325.
E. receive a refund of $375.
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #26
Learning Objective: 2
27. (p. 93) The financial planning objective is to:
A. evade taxes.
B. minimize taxes.
C. maximize income.
D. maximize aftertax
cash flows.
E. maximize tax credits.
Difficulty: Hard
Gradable: automatic
Kapoor Chapter
03 #27
Learning Objective: 3
28. (p. 96) Jennifer made $2,000 worth of charitable donations. Her total income is $36,000 and she is in
the 22% federal tax bracket. What is her charitable donations tax credit?
A. $320
B. $440
C. $552
D. $2,000
E. $5,760
Difficulty: Hard
Gradable: automatic
Kapoor Chapter
03 #28
Learning Objective: 3
29. (p. 103) Which type of tax expert would be of most value when you have a difference of opinion with
the tax department?
A. an enrolled agent
B. a nationallychartered
tax preparer
C. a CA
D. a tax accountant
E. a tax attorney
Difficulty: Easy
Gradable: automatic
Kapoor Chapter
03 #29
Learning Objective: 4
30. (p. 94) Making use of legitimate methods to reduce one’s taxes is called tax ____________.
A. evasion
B. planning
C. exemptions
D. deferred techniques
E. reductions
Difficulty: Easy
Gradable: automatic
Kapoor Chapter
03 #30
Learning Objective: 3
31. (p. 81) An example of a nonrefundable
tax credit is
A. interest on a credit card or charge account.
B. certain jobrelated
travel expenses.
C. the cost of commuting to work.
D. life insurance premiums.
E. student loan interest fees.
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #31
Learning Objective: 2
32. (p. 75) An example of a taxexempt
investment is
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.
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #32
Learning Objective: 2
33. (p. 76) Capital gains refer to
A. taxexempt
investments.
B. profits from the sale of an investment asset.
C. gains from the sale of capital assets
D. earnings from investments such as dividends or interest.
E. taxdeferred
investments.
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #33
Learning Objective: 2
34. (p. 76) Sheira Harvey worked in Poland for part of the year and earned $50,000 while she was there.
This income will not be included in her income for the year. This represents:
A. A deduction
B. An exclusion
C. An exemption
D. A tax credit
E. An increase of income
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #34
Learning Objective: 2
35. (p. 9697)
An RPP differs from an RRSP in that
A. earnings on the RPP are tax free after five years.
B. contributions may exceed $2,000 in the RRSP.
C. an RRSP is set up by an employer for an employee.
D. An RPP is set up by an employer for an employee.
E. funds are only to be used for education expenses
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #35
Learning Objective: 3
36. (p. 96) An RRSP, RPP, and IPP are examples of
A. taxexempt
retirement plans.
B. taxdeferred
retirement plans.
C. capital gains.
D. selfemployment
insurance programs.
E. jobrelated
expenses that are tax deductible.
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #36
Learning Objective: 3
37. (p. 93) “Grossedup”
Canadian dividends are multiplied by what amount in order to determine the level
of taxable dividends?
A. 15%
B. 18.97%
C. 45%
D. 50%
E. 60%
Difficulty: Medium
Gradable: automatic
Kapoor Chapter
03 #37
Learning Objective: 3
38. (p. 84) Which of the following is a nonrefundable
tax credit?
A. Tuition and education amount
B. GST and PST paid on purchases
C. Moving expenses
D. Life insurance premiums
E. Basic personal amount
Difficulty: Hard
Gradable: automatic
Kapoor Chapter
03 #38
Learning Objective: 2
39. (p. 87) Jeffrey is a selfemployed
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?
A. $5,760
B. $6,750
C. $7,380
D. $9,900
E. $12,500
Difficulty: Hard
Gradable: automatic
Kapoor Chapter