Joe, aged 24, and Kate, aged 24, met in college. While studying, Joe worked part-time selling car
Question:
Joe, aged 24, and Kate, aged 24, met in college. While studying, Joe worked part-time selling car parts to autobody shops in the GTA. He earned $12,000 a year, for two years. After graduating from hisprogram, Joe landed a job selling cars for Chrysler.Joes started his new job on January 1, 2023, and hisannual salary is $80,000 a year.Kate on the other hand, only worked part-time during the summermonths of her program.In 2020, she earned $20,000 working for the CNE.In 2021 and 2022, sheearned$8,000ayearworkingatCasinoNiagara part-time.Recently,Katelandedafull-timepositionatthe casino.Her annual salary is $65,000 a year.Kate's employer has a defined contribution pensionplan it offers its employees.The company matches employee contributions, dollar-for-dollar, to amaximum of 6% of salary.Joe's employer does not offer pension benefits.Assume that Joe's averagetax rateis25% andKate's averagetaxrateis22%.
AnswerthefollowingquestionsasofFebruary1,2023.
- IfJoecontinuestoworkforhis employer,andhis salary remainsthe same,whatwill behistotalRRSP contribution room?Assumehehas nevermadea contribution. (3marks)
- IfKatecontinues toworkforheremployer,andhersalaryremainsthe same,what willbehertotalRRSPcontributionroom?Assume shehas nevermade acontribution.(3marks)
- IfKatejoinsheremployerspensionplan,andmaximizesthecontributions,whatwillbeheroutstandingcontribution room? (3marks)
- IfJoemakesthemaximumcontributiontohisRRSP,willherereceiveatax refund?Ifyes,howmuch?(2marks)
- OnFebruary 10th,JoeandKatedecidedto getmarried.Ifthey getmarriedonSeptember1,2022, and Kathy makes a $1,000 spousal RRSP contribution, who would receive the taxdeduction?Howmuchwilltheyreceive?(2marks)
- Who would have to report the funds as income, if Joe withdraws them on September 2nd, 2023?(1mark)