• ADVANTAGES RRSP investments growth are tax-free - the returns are exempt from any capita gain tax or dividend tax etcs. . The contribution made to the RRSP is deducted from the pre tax income- thus reducing tax liability • · • • • RRSP contributions reduce their taxable income RRSP's are protected from creditors The income earned in an RRSP is not taxed until it is .withdrawn You get a tax refund every April if you invest in an RRSP No withholding tax on US Dividends with an RRSP The income earned is not tax until the time of withdrawal, which is usually the retirement age, where the tax rate is lower then during working days The withdrawals can be made at any age, there us no age limit to withdraw Ben fils Pros ADVANTAGES

• ADVANTAGES RRSP investments growth are tax-free - the returns are exempt from any capita gain tax or dividend tax etcs. . The contribution made to the RRSP is deducted from the pre tax income- thus reducing tax liability • · • • • RRSP contributions reduce their taxable income RRSP's are protected from creditors The income earned in an RRSP is not taxed until it is .withdrawn You get a tax refund every April if you invest in an RRSP No withholding tax on US Dividends with an RRSP The income earned is not tax until the time of withdrawal, which is usually the retirement age, where the tax rate is lower then during working days The withdrawals can be made at any age, there us no age limit to withdraw Ben fils Pros ADVANTAGES

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter4: Managing Income Taxes

Section: Chapter Questions

Problem 3LTAI

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Similar questions

K Explain how a deduction, such as the mortgage interest tax deduction, can save you money. Why do deductions benefit people in different tax brackets differently? Choose the correct answer below. OA. A tax deduction saves money by decreasing the tax bill directly. The amount saved is proportional to the tax bracket marginal rate. OB. A tax deduction saves money by decreasing the taxable income. The amount saved is proportional to the tax bracket marginal rate. OC. A tax deduction saves money by decreasing the tax bill directly. The amount saved is limited by the tax bracket marginal rate. OD. A tax deduction saves money by decreasing the taxable income. The amount saved is limited by the tax bracket marginal rate.
Which of the following will tend to INCREASE the benefit of the interest tax shield given a progressive tax rate structure?I An increase in tax ratesII A large tax loss carry forwardIII A large depreciation tax deduction IV A sizeable increase in taxable incomeA) I and III onlyB) I and IV onlyC) II and III onlyD) I, II, III and IV.
Which of the following statements is correct? O a. A tax offset can result in a refund if it relates to franking credits. O b. Tax offsets are same as allowable deductions as both reduce assessable income. O c. Any tax offset can increase deductions. O d. Tax offsets are used to reduce your taxable income.
Please help me with these questions based on RRSPs
Which of the following are true about Deferred Tax Liabilities? (check all that apply) In the future, tax rules require bigger expenses than GAAP Initially, tax rules require smaller expenses than GAAP In the future, tax rules require smaller expenses than GAAP They represent an obligation to make higher tax payments in the future Initially, tax rules require bigger expenses than GAAP
Tax Planning (LO 12.7) Select either "True" or "False" for each of the following statements. Item Description Answer a. Decreasing one's tax liability through legal methods is called tax - planning, while illegally reducing taxes is called tax evasion. b. In a "closed" transaction, all tax - significant events have been completed. c. The marginal tax rate is computed as the total tax paid divided by the total income of the taxpayer. d. The marginal tax rate is the most important rate for decision making in tax - planning situations. e. A timing tax - planning technique usually has the objective of deferring the payment of tax until a later year.
. What is the 'low income tax offset' (LITO)? What is the maximum LITO amount payable toeligible taxpayers? PLEASE PUT 3 REFERENCES
Which of the following has the greatest effect of reducing tax payable through the acceleration of deductions? a. Writing off any bad debts before the end of the income year. b. Value trading stock at market selling value where the market selling value is higher than the cost or replacement price. c. Ensuring investments are positively geared. d. Value trading stock at market selling value where the market selling value is higher than thecost or replacement price.
11) hy are capital gains typically taxed at a lower rate than income? Select an answer: It is difficult to calculate capital gains. Other taxes provide enough revenue for the government. People pay enough taxes already. The government wants people to invest.
How is before tax profit calculated? Question 25 options: Sales plus expenses Sales plus liabilities Sales minus expenses Sales minus liabilities.
Which statement is NOT true about the structure of the Earned Income Tax Credit (EITC)? A. EITC payments decrease as earnings increase, but everyone qualifies for some amount. B. At a particular range of income, government reduces EITC payments based on a certain fixed percent of income earned. C. EITC pays a fixed amount at a range of income. D. Up to a threshold, EITC pays a certain fixed percent of wage earned.
Which is true regarding the taxation of social security benefits? Having earned income will reduce the tax on benefits RMD's are not considered when calculating any possible taxes owed Benefits are taxed at a rate of 100% Benefits could be taxed at a rate of either 50% or 85%