Prior to 2017, Ms. Sherly Sam had no Earned Income for RRSP purposes. In 2017 and...

 

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Prior to 2017, Ms. Sherly Sam had no Earned Income for RRSP purposes. In 2017 and 2018, she had sufficient Earned Income to allow for maximum allowable RRSP deductions in 2018 and 2019. However, she did not make any contributions in either of those years. Sherly has been employed by a Canadian public corporation since 2018. The following informa- tion pertains to her income over the past two years: 2020 2019 Salary Before Benefits Automobile Benefit Employee Stock Option Benefit Benefit On Interest Free Loan Registered Pension Plan Contributions Deductible Employment Expenses Interest Income Taxable Capital Gains Net Business Income (Note 1) Royalty Income (Note 2) Net Rental Loss Spousal Support Payments Received Eligible Dividends Totals $150,000 7,000 4,000 2,000 ( 4,500) ( 3,200) 2,200 14,500 21,300 6,400 ( 5,000) 24,000 1,400 $220, 100 $150,000 6,500 3,000 1,500 5,000) ( 3,400) 2,100 6,300 14,600 6,600 ( 10,000) 24,000 1,500 $197,700 Note 1 The business income is from a mail order business that Sherly runs out of her home. Note 2 The royalty income is from a manual that she wrote on how to write instruction manuals. Sherly participates in her employer's money purchase Registered Pension Plan. Her employer contributes twice the amount contributed by each employee to the plan. Her Pension Adjust- ment for 2019 is $15,000. Required: Ignore all GST considerations. A. Calculate Sherly's Earned Income for the purpose of determining her maximum 2020 RRSP contribution by listing the items and amounts that would be included in her Earned Income. List separately the items that are not included in the Earned Income calculation. B. Calculate Sherly's maximum deductible RRSP contribution for 2020. Prior to 2017, Ms. Sherly Sam had no Earned Income for RRSP purposes. In 2017 and 2018, she had sufficient Earned Income to allow for maximum allowable RRSP deductions in 2018 and 2019. However, she did not make any contributions in either of those years. Sherly has been employed by a Canadian public corporation since 2018. The following informa- tion pertains to her income over the past two years: 2020 2019 Salary Before Benefits Automobile Benefit Employee Stock Option Benefit Benefit On Interest Free Loan Registered Pension Plan Contributions Deductible Employment Expenses Interest Income Taxable Capital Gains Net Business Income (Note 1) Royalty Income (Note 2) Net Rental Loss Spousal Support Payments Received Eligible Dividends Totals $150,000 7,000 4,000 2,000 ( 4,500) ( 3,200) 2,200 14,500 21,300 6,400 ( 5,000) 24,000 1,400 $220, 100 $150,000 6,500 3,000 1,500 5,000) ( 3,400) 2,100 6,300 14,600 6,600 ( 10,000) 24,000 1,500 $197,700 Note 1 The business income is from a mail order business that Sherly runs out of her home. Note 2 The royalty income is from a manual that she wrote on how to write instruction manuals. Sherly participates in her employer's money purchase Registered Pension Plan. Her employer contributes twice the amount contributed by each employee to the plan. Her Pension Adjust- ment for 2019 is $15,000. Required: Ignore all GST considerations. A. Calculate Sherly's Earned Income for the purpose of determining her maximum 2020 RRSP contribution by listing the items and amounts that would be included in her Earned Income. List separately the items that are not included in the Earned Income calculation. B. Calculate Sherly's maximum deductible RRSP contribution for 2020.

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