The rate that applies to CCA on residential rental buildings acquired after 1987 is percent. Choose the correct answer. A 7 B. 5 C.6 D. 4 12. Which of the following best describes the dividend gross-up? Choose the correct answer. A. an inflation of taxes payable for corporations that pay significant dividends B. a credit against taxes payable for individuals who earned dividend income from a Canadian corporation during the taxation year C. a deduction against property income for individuals who received specified types of dividends D. an increase of the taxable amount of dividend income, calculated by multiplying the actual dividend amount by a certain fraction 13. Which of the following does NOT accurately describe the calculation of federal tax payable for individuals? A. Progressive tax rates are applied to brackets (or marginal increments) of taxable income. B. There are currently five federal tax brackets, with rates ranging from 15% to 33%. C. The federal tax rates are marginal, meaning that once taxable income reaches the next tax bracket, all of the individual's taxable income is taxed at the higher rate. D. The federal tax brackets are indexed to the Consumer Price Index to account for inflation. 14. The production of business income generally requires , while the production of property income does not. Choose the correct answer. A. a significant amount of invested capital B. holding assets for a long period of time C. securing large credit accounts D. a significant amount of time and effort 15. Which of the following best describes the modified accrual approach used to record interest income earned by individual taxpayers from an investment contract? Choose the correct answer. A. Interest income, regardless of whether the interest is received or receivable, is reported on each anniversary date of the investment contract unless it was reported in a previous period. Interest income, regardless of whether the interest is received or receivable, is recorded based on the calendar year unless it was reported in a previous period. C. Interest income is recorded when received unless it was reported in a previous period. D. Interest income, regardless of whether the interest is received or receivable, is recorded on the last day of the fiscal period of the investment contract unless it was reported in a previous period. 16. Which of the following is an effective strategy to permanently reduce taxes payable on appreciated capital property? Choose the correct answer. A. Gift the appreciated property to family members as opposed to selling it. B. Convert appreciated business property to personal use property prior to selling it. C. Replace appreciated land and buildings with newer property of the same type within 24 hours. D. Delay the sale of the property until the taxpayer is in a lower tax bracket. 17. With respect to the maximum amount an individual can contribute to a TFSA, Choose the correct answer A. any amounts that are withdrawn from the account decreases the maximum annual contribution amount any amounts contributed above the annual maximum amount are subject to a penalty tax C. if an individual does not contribute the maximum amount for a given year, it cannot be made up for in the future D. contributions not made in one tax year can be made up for in a subsequent year 18. You are provided with the following amounts for Janet Mattera for the current year: * Net employment income (ITA 5 to 8) = $60,000 Interest income (ITA 12) = $5,900 * Taxable amount of dividends (ITA 12) = $2,620 Taxable capital gains (ITA 38 to 55) = $1,500 Allowable capital losses (ITA 38 to 55) = $2,500 Interest expense (bank loan for investment purposes) = $1,500 Investment counsel fees = $300 * RRSP deduction (allowed pursuant to ITA 60) = $11,500 Based on the above, the "net property income reported by Janet Mattera pursuant to ITA 3(a) for the current year is: Choose the correct answer. A. $7,520 B. $8,520 C. $58,460 D. $6,720 19. Mr. Moore incurred qualifying medical expenses of $4,528 and has net income for tax purposes of $86,287 in the current year. Mr. Moore is single and has no dependents. Assume that the current year limitation for the medical tax credit is $2,500. What is the medical expense tax credit for Mr. Moore under these assumptions? A. $679 B. $291 C. $2,589 D. $304 20. The production of business income generally requires , while the production of property income does not. Choose the correct answer. A. holding assets for a long period of time B. securing large credit accounts C. a significant amount of time and effort D. a significant amount of invested capital 21. Which of the following is an advantage of TFSAs over RRSPs? Choose the correct answer. A. TFSA withdrawals do not affect OAS clawback. B. TFSAs have more qualified investment options. C. TFSA yield more after tax funds, given the same investment results. D. TFSA contributions result in an immediate tax savings. 22. With respect to the calculation of net rental income, which of the following is incorrect? Choose the correct answer. A. Expenses that increase the useful life of the rental property and/or improve the condition of the rental property (i.e. an enduring benefit) are deductible from gross rents earned from the property. Expenses related to repair and maintenance of the rental property are deductible from gross rents earned from the property. Cc. Interest on debt used to purchase the rental property is deductible from the gross rents earned from the property. D. Net rental income is recorded on an accrual basis. 23. Gains realized on the sale of real property Choose the correct answer. A. are generally business income B. are primarily realized due to currency inflation C. can be capital gains or business income D. are generally capital in nature 24. The following information relates to the sale of a piece of land in the current taxation year: Adjusted cost base of land: $275,000 Total proceeds of disposition: $500,000 In the current year, the seller received $200,000 of the proceeds of disposition in cash and a note payable for the remainder ($300,000). What is the maximum ITA40(1)(a)(iii) capital gains reserve that can be claimed by the seller in the current year: A. $180,000 B. $135,000 C. $0 D. $225,000 25. With regard to the medical expense credit, which of the following is correct? Choose the correct answer. A. The tax credit is calculated based on the total qualifying medical expenses incurred by a taxpayer during the calendar year. B. Total qualifying medical expenses are reduced by the lesser of 3% of the taxpayer's net income in the year or an indexed amount in calculating the tax credit. C. The portion of the qualifying medical expenses exceeding the threshold is multiplied by the highest federal income tax rate. D. Qualifying medical expenses of the taxpayer, minor children and spouse can be included in the calculation of the tax credit but medical expenses related to the taxpayer's dependants over the age of 18 must be excluded. 26. Jagdish Patel would like to know how much of his unused RRSP deduction room will carry forward to the next taxation year. Assume the federal government's annual RRSP limit for the current year is set at $26,000. Jagdish provides you with the following information: Unused RRSP Deduction Room at December 31 of the prior year = $250 Prior year Earned Income = $82,500 Current year Earned Income = $95,750 * RRSP contribution made to his own self-administered RRSP plan during the current year = $12,430 Jagdish does not have an employer provided pension plan, so his pension adjustment in the prior year and current year is zero. Jagdish takes the maximum RRSP deduction on his current year's tax return. What is Jagdish Patels unused RRSP deduction room at the end of the current taxation year? A. $2,670 B. $250 C. $13,820 D. $5,055 27. How do employment insurance (EI) benefits received affect an individual's income? Choose the correct answer. A. El benefits are excluded from income. B. El benefits are included in income to the extent they are not repaid. C. El benefits are included in income. D. El benefits are included in income to the extent they are repaid. 28. With regard to federal income tax in Canada, Choose the correct answer. A. higher rates of tax are applied to lower levels of income using regressive tax brackets. B. higher rates of tax are applied to higher levels of income using progressive tax brackets. C. all residents of Canada are subject to the same flat tax rate which changes each year as it is indexed for inflation. D. all residents of Canada are subject to several different flat taxes depending on their personal situation. 29. Which of the following types of income is property income? Choose the correct answer. A. wages received by an employee B. royalties received by an individual for a company using a patent developed by the individual C. capital gains realized on the sale of shares of a publicly traded corporation D. the net income a proprietor receives from operating a retail store 30. The RRSP deduction limit is a(n) Choose the correct answer. A. annual limit, in which unutilized deductions in a year are forfeited B. one-time limit that must be utilized all in one year C. cumulative limit, in which unutilized deduction room can be carried forward to future years D. lifetime limit that can be utilized in any amount for a given year