Alex Barrett is 68 years old and his wife of many years, Laura Barrett, is 70 years
Question:
Alex Barrett is 68 years old and his wife of many years, Laura Barrett, is 70 years old. They are both retired and, other than the aches and pains that go with advancing years, they are both in good health.
They have no deductions to be used in the determination of Taxable Income and their respective incomes for the 2020 taxation year are as follows:
Alex Laura
OAS Payments $ 7,400 $ 7,400
Canada Pension Plan Receipts 11,000 3,000
RPP Receipts 52,000 Nil
Interest 2,000 500
Net Income For Tax Purposes And Taxable Income $72,400 $10,900
The only tax credits that are available to Alex and Laura are the following:
• basic personal
• spousal
• age
• pension income
Required: Determine the savings in federal Tax Payable that would arise if Alex and Laura made maximum use of the pension income splitting provisions. Describe (without calculations) the factors that created the difference in the combined Tax Payable.
Essentials Of Federal Taxation 2018
ISBN: 9781260007640
9th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver