Tax Planning and Strategy Quiz - Xerxus Consultants

Tax Planning and Strategy Quiz

Welcome to the Tax Planning and Strategy quiz to test your knowledge of key concepts and strategies. Let’s get started!

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#1 What is the main goal of tax planning?

a) Avoiding paying taxes altogether

b) Minimising tax liability within law

c) Delaying tax payments indefinitely

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#2. Which of the following is a common tax-saving strategy?

a) Investing in high-risk shares

b) Ignoring tax laws

c) Claiming all eligible tax deductions

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#3. What is a tax deduction?

a) A reduction in the amount of income subject to tax

b) A penalty for late tax payment

c) A fee paid to the tax consultant

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#4. Which of the following expenses can be deducted from a tax return of a company?

a) Personal groceries

b) Loan interest

c) Personal vacation costs

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#5. What is tax deferral?

a) Paying taxes early to avoid future increases

b) Ignoring tax payments

c) Postponing the payment of taxes to a later date

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#6. What is the benefit of contributing to a retirement account from a tax perspective?

a) It increases taxable income

b) It reduces taxable income

c) It has no impact on taxes

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#7. What is the term used for the income that is earned from the increase in the values of investments like shares and bonds?

a) Capital gains

b) Earned income

c) Passive income

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# 8. When you file your tax return that has unpaid taxes late, what extra taxes will you pay?

a) Penalties

b) Interest

c) Penalties and Interest

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#9. What is the purpose of a tax credit?

a) To increase your tax liability

b) To reduce the amount of tax owed to the tax commissioner

c) To penalise non-compliance

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# 10. Which of the following is not a tax credit?

a) Overpaid tax in previous years

b) Withholding income tax

c) Incurred expenditure

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# 11. What is the difference between a tax deduction and a tax credit?

a) A tax deduction reduces taxable income, a tax credit reduces tax owed directly

b) A deduction increases taxable income, a credit increases tax owed

c) There is no difference

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