Jane made a Registered Retirement Saving Plan (RRSP) contribution in January 2020 to claim as a deduction on her 2019 personal income tax return. She knew how much to contribute based on her Canada Revenue Agency (CRA) Notice of Assessment, which shows her the RRSP deduction limit (i.e. how much she can contribute). Jane does not have any RRSP carry-forward amount as she always maximizes her annual contribution. Rather than rely on her Notice of Assessment from the government, she would like to know how to calculate the contribution amount and has asked you for your help. Show Jane how you would calculate her 2019 RRSP contribution. Also, show her how you calculate her expected refund from making this RRSP contribution based on her marginal tax rate. She is very excited to know this information as she just filed her tax returns before the revised deadline and is expecting a refund shortly. (Ignore Non-Refundable Tax Credits) (see Tables A, D)

Her gross annual income is $100,000 and has been the same for the last 3 years due to the salary freeze at her company.

Calculate the 2019 RRSP contribution: 

Calculate the refund: 

  

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TABLE A 2019 Combined Federal and Quebec Personal Income Tax Brackets and Tax Rates 2019 Tax 2019 Taxable Income 2019 Taxable Income 2019 Tax Rates Rates first $43,790 over $95,259 up to $106,555 27.53% 45.71% over $43,790 up to $47,630 over $106,555 up to $147,667 32.53% 47.46% over $47,630 up to $87,575 over $147,667 up to $210,371 37.12% 49.97% over $87,575 up to $95,259 over $210,371 41.12% 53.31% TABLE A 2019 Combined Federal and Quebec Personal Income Tax Brackets and Tax Rates 2019 Tax 2019 Taxable Income 2019 Taxable Income 2019 Tax Rates Rates first $43,790 over $95,259 up to $106,555 27.53% 45.71% over $43,790 up to $47,630 over $106,555 up to $147,667 32.53% 47.46% over $47,630 up to $87,575 over $147,667 up to $210,371 37.12% 49.97% over $87,575 up to $95,259 over $210,371 41.12% 53.31%