John is a management consultant by profession, and he works as a freelance consultant for 3
prominent corporations in British Columbia.
Following are some personal details of John Deacon
1. Full Name - John David Deacon
2. Date of birth - April 14th, 1990
3. Status in Canada – Canadian Citizen
John is married to Rachel and the Deacon family has one child; Blake who is currently 3 months
old. (Rachel is a housewife). For the year 2021, John recorded a total income of $125,794 and
qualifies for both the federal and provincial tax credits (the federal basic personal amount
$13,808 applied at a 15% tax rate, the provincial basic personal amount $11,070 applied at a
5.06% tax rate). Furthermore, John donated $9,250 to a church located in Langley, BC.( John
plans to claim all donations to reduce his effective tax rate).
John banks with the Royal Bank of Canada (RBC), in which he maintains a chequing and a
savings account. On the day of filing tax John’s bank details were as follows;
Chequing account balance - $ 9,012
Savings account balance - $ 67,106

The marginal tax rate for each tax bracket is as follows.

2021 Taxable Income	2021 Combined Marginal Tax Rate
$0 to $42,184	20.06%
$42,184 to $49,020	22.70%
$49,020 to $84,369	28.20%
$84,369 to $96,866	31.00%
$96,866 to $98,040	32.79%
$98,040 to $117,623	38.29%
$117,623 to $151,978	40.70%
$151,978 to $159,483	44.02%
$159,483 to $216,511	46.12%
$216,511 to 222,420	49.80%
$222,420 +	53.50%

Furthermore, John uses a visa credit card from RBC and his average spending per month
amounts to $1,892. John currently lives on rent, and he plans to purchase his first apartment in
the year 2027. Considering his forecasted income, he plans to purchase an apartment within a
price range of $500,000 - $600,000 from the lower mainland.
John is currently looking for options to grow his funds as well as defer his tax through low-risk
investment options. (He expects his income to grow every year). Hence, he is looking for your
advice. Now, John is considering two options for his former objective
• Registered Retired Savings Plan (RRSP)
• Tax-Free Savings Accounts (TFSA)
John has an RRSP contribution limit of $11,200 and a TFSA contribution limit of $9,600 for
2021.

Assume you are a financial consultant and you have received all the above information regarding
John, and he wishes to clarify the following from you. An extract from his email to you is as
follows;
“To – Financial Consultant
From – John Deacon
Dear Financial Consultant,
Considering my financial situation and future plans, can you please compile a report which
addresses the following;
1. The amount of tax I will pay to the CRA (without any contributions to RRSP or TFSA)

2. I am planning to invest $10,000 in an RRSP with a rate of return of 4% per annum which
would mature in 5 years’ time (Guaranteed Investment Certificate). If I go ahead with
this initiative.
a. Calculate the revised tax payable to the CRA along with the former contribution
to the RRSP.
b. Advise/Recommend me, when my investment grows, how will this defer my tax
while in the RRSP?
c. Advise/Recommend me of the implications if I access funds in the RRSP to buy
my first home.

3. I am also interested in a TFSA; can you please advise me on the following;
a. How does a TFSA differ from an RRSP?
b. Recommend me as to how does the TFSA fits into my portfolio? What should I
invest in?
c. Recommend me, how much should I invest in a single TFSA investment?
considering my financial situation (Mention any related fees related to this
initiative)
Best Regards,
John Deacon.
Requirement;

Final question: Considering the above, you are required to compile a report of 2000 words of which would address the above
questions posted to you from John making assumptions where necessary. Follow APA guidelines.

Answer rating: 100% (QA)

1 Assuming that Johns only income is from his consulting work his federal and provincial tax ... View the full answer