This month we offer you a quiz to test your tax knowledge in various areas relating to your personal tax planning. You might find some useful ideas here!
We’ve put the answers separately, on a separate blog post, so you can try the questions on your own (without peeking at the answers) and see how well you score. Try to explain your answers to yourself, along with any related planning points that must be considered.
1. You sell some shares on the stock market for $12,000 more than you paid several years ago. What portion of the $12,000 gain is included in your income and subject to tax?
2. You sell some shares on the market this month for $12,000 less than you paid several years ago. Your only income this year is $65,000 of employment income. Can you deduct the capital loss?
3. You and your spouse both work full-time. You earn $80,000 and your spouse earns $40,000. You have a two-year-old child. You pay $11,000 a year to a nanny who takes care of your child while you work. Can you deduct the child-care expenses?
4. You started working for the first time in 2018. Your employment income was $50,000 in 2018, and will be $60,000 for 2019. You are not a member of a pension plan and you haven’t contributed to an RRSP before. How much can you contribute to an RRSP, to claim a deduction on your 2019 return? Until when can you make that contribution? And what happens if you don’t make a contribution for 2019?
5. You are employed full-time as a social worker, but also live on, and operate, a small farm growing crops. This year your farm will have a $40,000 loss, as it has for each of the past five years. Can you deduct this $40,000 against your $60,000 of employment income?
6. In addition to having $60,000 of employment income, you receive US$6,000 (C$8,000) in dividends on U.S. stocks held in your Canadian brokerage account. Of this amount, 15% (US$900) is withheld for U.S. tax, so you receive only the balance of US$5,100 (C$6,800). Do you have to report all the dividends and pay Canadian tax on the full C$8,000, or can you report just the C$6,800 you received?
7. You have been working in Canada in the computer field. You accept an offer to move to France to work on an 18-month project, during which your spouse and children will remain at home. You will be in France for all of 2020, and your income there will have French tax withheld at source. Will you have to report the income for Canadian tax purposes?
8. Your aunt gave you some shares in January 2019 as a wedding gift. These shares cost her $5,000 (including commission) many years ago, and at the time of the gift they were worth $20,000. You sell them now, in September 2019, for $26,000. How much is added to your income for tax purposes from the gift and the sale combined?
9. You wish to donate $5,000 to a charity. You can choose among three options:
(a) writing a cheque for $5,000;
(b) donating a painting that you bought last year for $3,000, and which an art appraiser has told you is now worth $5,000;
(c) donating some shares in Apple that you own, which cost you $3,000 a few years ago and are now worth $5,000.
Which is the best and which is the worst option to choose, and why?
10.You have spent money this year on the following items for yourself and your spouse and children:
(a) crutches due to a broken ankle;
(b) Tylenol as prescribed by your physician;
(c) vitamins as ordered by your physician;
(d) medical marijuana as per a “medical document” you obtained under the Cannabis Regulations;
(e) prescription sunglasses;
(f) a travel health plan for your vacation in the U.S.;
(g) a dental care plan;
(h) a 30km taxi ride to the hospital when you broke your ankle; and
(i) tutoring for your son, who has a learning disability, as certified by your physician.
Which of these are expenses for which you should save the receipts and make a claim on your tax return, and what will the claim be worth?
View the answers here.