Mr. Rui retired from his job with Wise and Foresighted Consulting Ltd. on February 28, 2012. Mr. Rui expects his 2012 income for tax purposes to be as follows:
Employment income .................................................... $ 7,000
Pension income:
Monthly superannuation (10 months of $3,450) ..................... 34,500
Old Age Security .......................................................... 6,500
Canadian Pension Plan ................................................... 11,500
Farming income ........................................................... 20,000
Income from rental of apartment ........................................ 10,800
Royalty income from books written by Mr. Rui ...................... 14,200
Interest income ............................................................. 12,000
Total income ............................................................. $116,500
Additional Information
(1) Mr. Rui's 2012 employment income is net of an RPP contribution of $300. His PA for 2012 is expected to be $600.
(2) Mr. Rui will be 71 in February 2013. His wife is now 67.
(3) In 2012, Mrs. Rui withdrew $6,000 from her RRSP. Mr. Rui had made the following contributions to Mrs. Rui's RRSP: January 2012 -$2,000; April 2011-$1,000; February 2010 -$1,000; December 2009 -$3,000. Mr. Rui did not deduct the January 2012 contribution in 2011.
(4) Mr. Rui's employer reported a PA for him of $7,000 in 2011. His earned income in 2011 was $66,000.
(5) Mr. Rui has unused RRSP deduction room from prior years of $5,000.
REQUIRED
(A) Determine the tax implications of Mrs. Rui's $6,000 RRSP withdrawal.
(B) Determine Mr. Rui's maximum tax deductible RRSP contribution for 2012. What additional RRSP contribution should Mr. Rui make for 2012?
(C) What should Mr. Rui contribute to his RRSP for 2013?
(D) What additional planning steps would you advise Mr Rui to take in connection with his RRSP in 2013?