Which of the Following Is an Acceptable Method of Reducing

question 46

Multiple Choice

Which of the following is an acceptable method of reducing your tax bill for the current year?

• A)Making large payments on your outstanding mortgage
• B)Increasing your contributions to your tax free savings account
• C)Earning income outside of Canada
• D)Deducting employment expenses you weren't reimbursed for

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Definitions:

Leverage

The strategic use of financial instruments or borrowed capital, such as debt, to increase an investment's potential return.

Profitability

A measure of how efficient a company is at generating profits from its resources, often expressed in terms of margins or ratios.

EBIT

A financial metric called EBIT that calculates a company's profits prior to the deduction of interest and income tax costs, encompassing all other expenses.

Operating Leverage

A financial metric that measures the proportion of fixed costs in a company's cost structure, indicating how a change in sales volume will affect operating income.