Part A Calculating Taxable Income, Income Tax Payable and Effective Tax Rate (15 Marks)

(The following information is for solving Questions 1 to 13 below)

Tax Brackets for Salary and Interest Income		Dividend Tax Treatment
0 to $15,000 $15,001 to $30,000 $30,001 to $70,000 $70,001 to $110,000 $110,001 to 200,000 $200,000 plus	0% 15% 25% 30% 40% 55%	Dividend Gross Up Rate Federal Dividend Tax Credit Provincial Dividend Tax Credit	20% 14% 8%
Charity Tax Credit		Capital Gains Exclusion Rate	50%
First $200 donation Above $200 donation	12% 20%

It is the month of February, and Taylor is working on their income taxes. Taylor recorded the following information from the past year.

• Salary Income $120,000
• Interest Income from Bond Mutual Fund $2,000
• Capital Gains $4,400
• Dividend Income $1,450
• RRSP Contribution $4,000
• Charity Contributions to Algonquin College Alumni Fund $500

What is the amount of taxes they would pay on their capital gains income? Assume a 40 percent tax rate.

Question 5 options:

	$620.00
	$775.00
	$825.00
	$880.00
	$900.00

Question 6 (1 point)

What is Dividend Gross Up amount on their dividend income?

Question 6 options:

	$1,560
	$1,645
	$1,820
	$1,740
	$1,440

Question 7 (1 point)

What would be the tax on the Dividend Gross Up amount? Assume a 40% tax rate.

Question 7 options:

	$495.00
	$597.50
	$576.00
	$630.00
	$696.00

Question 8 (1 point)

What would be the federal dividend tax credit amount?

Question 8 options:

	$243.60
	$176.00
	$248.32
	$195.00
	$211.60