Reference no: EM132918095

Questions -

Q1. Tanya is 63 years old and her husband Lars is 64 years old; they have been married for 28 years. The couple has just retired and they are about to start collecting their Canada Pension Plan (CPP) retirement benefits. They both worked for 32 years. Tanya is eligible for CPP benefits of $525 per month; Lars is eligible for a CPP pension of $695 per month. If they apply to assign their CPP pensions, how much will Tanya receive each month?

a) $571

b) $599

c) $610

d) $621

Q2. Michelle is eligible to receive an annual Old Age Security (OAS) benefit of $6,942.36. If the OAS clawback threshold is $74,788, Michelle's net income is $81,963 and her combined marginal tax rate is 42%, how much will Michelle receive in OAS benefits after tax?

a) $1,076.25

b) $3,402.34

c) $4,122.58

d) $5,866.11

Q3. What statement regarding locked-in retirement accounts (LIRAs), life income funds (LIFs), locked-in retirement income funds (LRIFs) and annuities is correct?

a) An annuitant under a matured RRSP can rollover his or her plan assets to a LIRA on a tax-deferred basis. Following this, minimum annual withdrawals must be made from the LIRA.

b) LIFs are subject to minimum and maximum withdrawal limits; LRIFs are only subject to minimum withdrawal limits.

c) When converting the assets in a LIF to an annuity, a married annuitant must do so on a joint and last survivor basis unless the annuitant's spouse signs a waiver.

d) With a prescribed annuity, annuity payments are periodically adjusted to keep pace with changes in the Consumer Price Index.

Q4. Last week, Roger died at age 58; he is survived by his spouse Terri. Roger was a member of his company's registered pension plan which stipulated a normal retirement age of 65. Roger's pension was governed by the Pension Benefit Standards Act. Pursuant to that Act, what option will be made available to Terri?

a) She can transfer the commuted value of Roger's benefits to her own pension plan if permitted by her plan.

b) She can transfer the commuted value of Roger's benefits to a locked-in retirement account.

c) She can transfer the commuted value of Roger's benefits to a financial institution to purchase an immediate or deferred annuity.

d) She would receive an amount that is at least 60% of the reduced early retirement pension that Roger was already eligible to collect

Q5. Angelo is employed by the Main Monkey Business Talent Agency and is part of the deferred profit sharing plan (DPSP) sponsored by the company. Last year his earnings were $66,950; this year his earnings will be $87,400. If the money purchase limit for the year is $26,230, what is the MAXIMUM contribution that can be made to the DPSP this year on behalf of Angelo?

a) $12,051

b) $13,115

c) $15,732

d) $26,230

Q6. Tyrone has been an employee of Mead Enterprises since January 1, 1984. In January 1988, he joined his employer's registered pension plan. Last week, Mead Enterprises terminated Tyrone's employment and gave him a retiring allowance of $38,000. What is the MAXIMUM amount Tyrone is permitted to rollover into his RRSP and claim an eligible deduction?

a) $24,000

b) $28,000

c) $30,000

d) $38,000

Q7. Francesca, who was self-employed, died on August 17th of this year. With regards to her terminal tax return, on what day next year will Francesca's balance-due date fall?

a) February 17th

b) April 30th

c) June 15th

d) June 30th

Q8. Two years ago, Miguel and Juanita established a partnership. At that time, Miguel contributed $100,000 to the business; Juanita contributed $175,000. Their partnership agreement stipulates that Miguel has a 35% interest in the partnership and Juanita's interest is 65%.

Two years ago, the partnership recorded a loss of $21,000 but this year, the company has a profit of $144,000. Last year, Juanita withdrew a lump sum of $12,000 from the partnership. This year, Juanita received a monthly draw of $2,000 for the first six months of the year. If Juanita sells her interest in the partnership this year for $200,000, what is her capital gain or her capital loss?

a) $15,475 capital loss

b) $30,950 capital loss

c) $54,950 capital gain

d) $71,200 capital gain

Q9. Three years ago, Cecilia purchased a commercial property for $212,000 where $70,000 is attributed to the land and $142,000 is attributed to the building. Over the years, Cecilia has claimed $26,000 in capital cost allowance (CCA) on the building. This property represents the only property in the CCA class. This year, she sold the property for $175,000 with $64,450 attributed to the land and $110,550 attributed to the building. What are the tax implications of Cecilia's transaction?

a) $5,550 capital loss on the land and $31,450 capital loss on the building

b) $5,550 capital loss on the land and $5,450 terminal loss on the building

c) $5,550 capital loss on the land and $5,450 recapture of CCA on the building

d) $5,550 capital loss on the land and $26,000 recapture of CCA on the building