Pop Quiz – Tax Time

Last updated January 2024.

Tax season is upon us. Do you know everything you need to know before you file? This quiz will help you gauge your preparedness.

1. The last day to file your 2023 personal income tax and benefit return without penalty is:

a) June 1, 2024

b) April 30, 2024

c) If you think you will get a tax refund, there is no deadline for filing; the CRA is in no rush to pay you

d) June 17, 2024

2. A TFSA (Tax-Free Savings Account) allows for tax-free growth of investment income and capital gains from qualified investments, which means you won't be taxed on withdrawals.

a) True

b) False

3. The 2024 TFSA contribution limit is:

a) There is no limit

b) $6,500

c) $10,000

d) $7,000

4. You will receive a tax slip for your TFSA.

a) True

b) False

5. The deadline to contribute to your RRSP (Registered Retirement Savings Plan) for the 2023 tax year is:

a) March 31, 2024

b) February 29, 2024

c) March 1, 2024

d) None of the above

6. What is the maximum RRSP contribution for the 2023 tax year?

a) 5 per cent of the income you earned in the previous year or $26,230

b) 18 per cent of the income you earned in the previous year or $30,780

c) 32 per cent of the income you earned in the previous year or $26,750

d) Sky's the limit — you can contribute as much as you like

7. The main objective of a spousal RRSP is to:

a) Shift retirement income from the higher-income spouse to the lower-income spouse

b) Encourage your spouse to contribute to his or her RRSP

c) Engage in some friendly competition on which spouse can contribute more to his or her account

d) There is no such thing. RRSPs are individual; you can only contribute to your own account

8. You can deduct capital losses on investments in your TFSA or RRSP account on your tax return.

a) True

b) False

9. For tax purposes, sales of securities are always treated as capital gains or losses.

a) True

b) False

10. You are not required to report unrealized investment gains or losses.

a) True

b) False

11. What exchange rate do I need to apply to sale of foreign securities?

a) The relevant foreign exchange rate that is in effect on the day you are trading

b) The relevant foreign exchange rate that is in effect on the day the purchase or sale settles

c) The relevant foreign exchange rate that is in effect on April 30, 2024

d) The average relevant foreign exchange rate for 2023

12. The dividend tax credit is intended to reduce the amount of tax you pay on Canadian dividends you receive.

a) True

b) False

How did you do? If your tax intel could use a little fine tuning, visit our Investment and Tax Centre for all the key details you need to know.

Answer Key:

1. Depending on your employment status, either b) or d) is correct. While the deadline to file your 2023 personal income tax and benefit return is April 30, 2024, the deadline is June 17, 2024 if you or your spouse or common-law partner carried on a business in 2023. However, any tax owing is due no later than April 30, 2024.
2. a) True. With a TFSA, you can save or invest your money without tax implications upon withdrawal.
3. d) The TFSA contribution limit for 2024 is $7,000. You don't lose your contribution room, so if you've never contributed you could have up to $95,000 of available room in 2024. For more information, visit the Canada Revenue Agency (CRA) website.
4. b) In most cases, you won't receive any tax slips for your TFSA because contributions to a TFSA aren't tax-deductible, and any withdrawals made are tax-free. Find out more in Should I Expect a Tax Slip for My TFSA?
5. b)
6. b) The maximum amount you can contribute to your RRSP for 2023 is either 18 per cent of the income you earned in 2022 or $30,780, whichever is lower. However, there are other factors that may affect your contribution limit, such as unused contribution room and pension plan contributions. You can find your RRSP contribution room on your most recent Notice of Assessment, or by visiting MyAccount on the CRA website.
7. a) You can claim a tax deduction for any contribution you make to a spousal RRSP. However, the total contributions you make to your RRSP and the spousal RRSP cannot exceed your RRSP contribution limit for the year.
8. b) You cannot deduct capital losses on investments held in a registered account, such as your RRSP or TFSA, on your tax return.
9. b) While most sales of securities are treated as capital gains or losses (50 per cent of the gains are taxed instead of 100 per cent), the gains or losses on short-sale transactions are normally considered income. This means 100 per cent of the income from short selling is taxable.
10. a) Unrealized gains or losses are reportable in certain circumstances. For example, if you transfer a security held in your non-registered account to your RRSP or TFSA, you are considered to have sold the security and any unrealized capital gain will be taxable. Any capital loss, however, will not be deductible.
11. b)
12. a) Because dividends are paid from a company's after-tax income, the government of Canada provides individuals with the dividend tax credit. This means that dividends are taxed at a lower tax rate than interest or other types of income.