1. With regard to the Canadian income tax systems, which of the following statements are true?

1-A dollar of reduced income taxes puts more money in an individual's pocket than a dollar of incremental income.

2-Tax evasion is illegally paying less in tax than the law permits.

3-Tax planning involves activities where taxpayers knowingly report less tax payable than what the law obligates them to pay.

4-The General Anti-Avoidance Rule (GAAR) provisions were introduced to help equip the CRA to deal with abusive tax avoidance schemes.

a) 1 and 2

b) 1 and 4

c) 2 and 3

d) 3 and 4

2. Carrie, who is an income beneficiary of a trust, recently turned 25. Last year she received $5,600 of dividend income. Of the income received, $4,200 of dividend income came from a major Canadian corporation and the balance came from a US public company. Identify the statement regarding the applicable tax consequences that is true.

a) Dividend income from the US company is fully taxable.

b) Only the Canadian dividend income is taxable.

c) Dividend income received from a trust is not taxable.

d) The grossed-up amounts of the Canadian and US dividends are taxable.

3. Your client, Rhonda, is coming to meet with you tomorrow for an annual review. You call Rhonda in advance of the meeting, and ask her to bring her most recent Notice of Assessment. Which of the following pieces of information could you obtain from Rhondas Notice of Assessment?

i) RRSP contribution limit

ii) TFSA contribution limit

iii) CPP contributions payable

iv) OAS contributions payable

a) i) and iii)

b) i) and iv)

c) ii) and iii)

d) ii) and iv)

4. Frank, age 63, and Linda, age 65, are retired and each have an income of approximately $100,000. The bulk of Lindas income comes from her defined benefit pension plan (DBPP), CPP and OAS, while Franks income consists primarily of CPP, and RRIF and TFSA withdrawals. The couple have approached you for advice regarding income splitting opportunities. How should you advise them?

a) Linda can reduce her OAS clawback by splitting her pension with Frank

b) Frank can split only his RRIF withdrawals but not his TFSA withdrawals with Linda

c) If Linda elects to split her pension with Frank, the split must be 50/50

d) Frank and Linda should not split their incomes as they are already in the same marginal tax rate