Part A Calculating Taxable Income, Income Tax Payable and Effective Tax Rate

Last year, Elizabeth received the following in different forms of income:

• Salary was $90,000
• Interest payments from her bond mutual funds was $3,000
• Dividend payments from her equity mutual funds was $4,500
• Capital gains from selling some of her shares in Bell Canada Enterprises Ltd was $2,500

The combined federal and provincial tax rates in the province she lives in is 31 percent. For dividends, the Gross up amount is 24 percent, federal dividend tax credit is 14 percent, and the provincial dividend tax credit is 4.5 percent.

Question 5

What is the amount of taxes she would pay on her capital gains income?

Question 5 options:

	$775.85
	$387.50
	$697.50
	$465.00
	None of the Above

Question 6

What is Dividend Gross Up amount on her dividend income?

Question 6 options:

	$5,580
	$5,895
	$5,445
	$6,750
	None of the Above

Question 7

What would be the tax on the Dividend Gross Up amount?

Question 7 options:

	$1,827.45
	$1,729.80
	$1,687.95
	$2,092.50
	None of the Above

Question 8

What would be the federal dividend tax credit amount?

Question 8 options:

	$825.30
	$762.30
	$781.20
	$697.50
	None of the Above

Question 9

What would be the provincial dividend tax credit amount?

Question 9 options:

	$251.10
	$303.75
	$245.03
	$265.28
	None of the Above

Question 10

What would the amount of taxes she would pay on her dividend income?

Question 10 options:

	$697.50
	$762.30
	$781.20
	$825.30
	None of the Above

Question 11

What is the total amount of taxes would she be paying on her total taxable income?

Question 11 options:

	$31,000
	$27,900
	$29,915
	$28,925
	None of the Above

Question 12

What is the average effective tax rate would Elizabeth be paying on her total taxable income?

Question 12 options:

	31.0%
	29.9%
	23.5%
	28.8%
	None of the Above