Q. Three years ago in January, Helmut borrowed $20,000 to purchase shares in ViewMax Inc., a small film distribution corporation. The annual interest expense on the loan amounts to $2,000 and the shares do not pay dividends. Helmut does not have any other investment income, but he does have employment income of $120,000 per year. Helmut held the shares for three complete years before selling them at the end of last year. He realized a capital gain of $28,000. What is the amount of Helmut's cumulative net investment loss at the time of the sale?

1. $4,000
2. $6,000
3. $9,333
4. $21,000

Q. Solomon contributed $20,000 to his RRSP at a time when his marginal tax rate was 52%. At retirement, which he anticipates being 20 years from now, he expects to continue to have a marginal tax rate of 52%. Based on a discount rate of 5%, what is the present value of the amount of tax Solomon will pay on a withdrawal of $20,000 from his RRSP in his first year of retirement?

1. $0
2. $3,834
3. $3,920
4. $10,400

Q. In 2000, Francine purchased a cottage in the country for $110,000; she sold it for $172,000 in January 2012. During her period of ownership, Francine spent three weeks at the cottage during the summer and approximately two weekends each month.

Francine claimed the principal residence exemption from 2003 to 2008 (inclusive) on her house in the city which she sold when she moved into the apartment rented by her new husband. In 2012, Francine sold the cottage as a result of her recent marital breakdown. How much of her capital gain on the cottage can she exempt using the principal residence exemption?

1. $0
2. $28,615
3. $38,154
4. $46,500

Q. Maurice purchased an investment that offered substantial tax deferral. The investment allows him to defer $100,000 in taxes for a 6-year period. If the after-tax rate of return on the investment is 10%, what is the present value of the tax deferral benefit?

1. $37,907
2. $43,553
3. $56,447
4. $62,092

Q. Gerrard purchased a $100,000 US T-bill for $98,000 US at a time when the exchange rate was 0.68. When the T-bill matured, the exchange rate was 0.665. What is Gerrard's foreign exchange gain,BEFOREconsidering the $200 exemption?

1. $3,317
2. $2,941
3. $2,488
4. $3,117

Q. Jason enjoys restoring antique furniture. Last year, he acquired six pieces at a cost of $300 each. He was able to restore the furniture and sell them for total proceeds of $9,600. What is the effect on Jason's taxable income?

1. Jason has business income of $7,800.
2. Jason has business income of $9,600 and a capital loss of $1,800.
3. Jason has business income of $3,900.
4. Jason has a taxable capital gain of $3,900.

Q. Peter has a 43% marginal tax rate and he plans to invest $10,000 in his RRSP, so he will save $4,300 in current taxes by deducting the contribution, calculated as ($10,000 43%). He has calculated that this amount in his RRSP will grow to $22,000 by the time he retires in 10 years. At that time, he will withdraw the funds and he expects his marginal tax rate to be 27%, so he will have $16,060 left after tax, calculated as [$22,000 (1 - 27%)]. What is the net present value of his investment, assuming an after-tax rate of 5% as the appropriate discount factor?

1. $3,506
2. $9,859
3. $4,159
4. $14,149

Q. Arthur earned $14,000 in dividends from a Canadian-controlled private corporation (CCPC). His dividends are not eligible for the enhanced dividend tax credit. He has a federal marginal tax rate of 29%, a provincial marginal tax rate of 19.7% and he lives in a province where the provincial dividend tax credit is 6.60%. How much of the dividends received by Arthur will he retain after-tax?

1. $4,027.33
2. $8,965.83
3. $9,972.67
4. $12,465.83