Mercedes Mendoza is a resident of Ontario and has rented an apartment in Toronto because she has enrolled at GBC. She wants to also have a new flat screen television as a diversion when she is not studying. But the only source of money for this purchase is money in her Registered Retirement Savings Plan (RRSP). The television will cost $6,000. If Mercedes withdraws $6,000 from her RRSP to pay for the television, how does the redemption process work (ie. how much money will Mercedes receive from the withdrawal and how much tax will she have to pay to Canada Revenue Agency)? (Assume Mercedes is in a 40% marginal tax rate bracket)

She will receive $6,000 upon withdrawal and she will pay $2,400 in total taxes

She will receive $4,800 upon withdrawal and she will pay $1,200 in total taxes

She will receive $6,000 upon withdrawal and she will pay $1,200 in total taxes

She will receive $4,800 upon withdrawal and she will pay $2,400 in total taxes

Answer rating: 100% (QA)

The detailed answer for the above question is provided below Mercedes will receive 4800 upon wit... View the full answer