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Quiz: Investment income

7 questions

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1 Why does the dividend amount reported on a return exceed what the taxpayer actually received? The reported amount includes foreign withholding tax The reported amount includes accrued but unpaid dividends Dividends from taxable Canadian corporations are grossed up and offset by a dividend tax credit The reported amount is the pre-tax corporate income attributable to the shares

Answer key unconfirmed — rests on 5 unverified claims.

2 A taxpayer holds a compound-interest investment that pays nothing until maturity in four years. When is the interest reported? Entirely at maturity, when it is received As it accrues, on at least an annual basis, even though no payment has been received Only once a T5 is issued for it At the taxpayer's election, either annually or at maturity

Answer key unconfirmed — rests on 3 unverified claims.

3 A taxpayer transferred an investment portfolio to her spouse and a separate one to her minor child. What follows? Nothing is attributed once legal ownership has transferred Income is attributed for the spouse only; the transfer to a minor is fully effective Income is generally attributed back to her in both cases; for the minor, capital gains are not attributed Both the income and the capital gains are attributed back to her in both cases

Answer key unconfirmed — rests on 2 unverified claims.

4 Which of these are deductible as carrying charges? Select all that apply.

Select all that apply.

Interest on money borrowed for personal purposes Fees charged inside a registered plan Interest on money borrowed to contribute to a registered plan Interest on money borrowed to earn income from a business or property

Answer key unconfirmed — rests on 2 unverified claims.

5 A taxpayer holds specified foreign property with a substantial total cost but it produced no income this year. Does anything need filing? Only where the property was disposed of during the year Only where the property is held through a foreign entity No — with no income there is nothing to report Yes — Form T1135 is required where total cost exceeds the threshold, whether or not income arose from the property

Answer key unconfirmed — rests on 1 unverified claim.

6 A taxpayer holds foreign dividend-paying shares inside her TFSA and foreign tax was withheld. Can she claim a foreign tax credit? Yes, against her Canadian tax on other income Yes, but only in a RRIF, not a TFSA No — no foreign tax credit is available for foreign withholding tax on property inside a registered plan Yes, carried forward until she withdraws from the plan

Answer key unconfirmed — rests on 2 unverified claims.

7 How is foreign investment income brought onto the return, and how far does the foreign tax credit go? Reported in the foreign currency, with CRA converting it on assessment Converted to Canadian dollars using a transaction-date or annual average rate as appropriate; the credit is generally limited to the Canadian tax otherwise payable on that income Converted at the year-end rate in all cases; the credit is unlimited Converted at the annual average rate only; the credit may exceed the Canadian tax on the income

Answer key unconfirmed — rests on 2 unverified claims.

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