A New Brunswick resident earned $20,000 in interest income and $10,000 in capital gains. Calculate the average tax rate.

Question

Quizplus · Accepted Answer

To calculate the average tax rate, we need to find the total income and total tax paid. Assuming a tax rate of 20% for capital gains and 30% for interest income in New Brunswick:

Total income = $20,000 + $10,000 = $30,000
Tax paid on interest income = $20,000 x 30% = $6,000
Tax paid on capital gains = $10,000 x 20% = $2,000
Total tax paid = $6,000 + $2,000 = $8,000

Average tax rate = Total tax paid / Total income x 100%
= $8,000 / $30,000 x 100%
= 26.67%

Therefore, B) 39.03% is not the correct answer.

A New Brunswick Resident Earned $20,000 in Interest Income and $10,000