Final Exam Review - Chp 10 notes

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Management and Organizational Studies
Management and Organizational Studies 3362A/B
Ann Bigelow

RRSPsInvestor can deduct a limited amount of contributions to the plan for income tax purposesIndividual is not subject to tax on the income earned by the asset in the plan until it is withdrawnWithdrawals are treated as ordinary income even if they were earned as dividends or capital gains within the plan Interest paid on funds borrowed to finance RRSP contributions is not deductibleRRSP Deduction Limitthis amount determines the maximum contributions to an RRSP that can be deducted in a year Calculated by ABRCAtps unused RRSP deduction room at the end of the PRECEDING taxation yearBthe amount if any by which a The lesser of the RRSP dollar limit for the year and 18 of the tps earned income for the PRECEDING taxation yaer Exceeds the total of all amounts each of which is b The tps pension adjustment for the preceding taxation year in respect of an employer orc A prescribed amount in respect of the tp for the year Cthe tp net past service pension adjustment for the year and Rthe tps total pension adjustment reversal for the yearDefinitions Unused RRSP deduction roomthe cumulative total of all amounts determined under the formula for prior years less any amounts that have been deducted in those years Deduction room can be carried forward for tp who dont have money to make a deductible contribution in a particular year and provides the basis for a deductible contribution in any future yearRRSP dollar limit22450 for 2011 Earned IncomeAdd net employment income without RPP contribution deductions income from carrying on a business net rental income income earned as an active partner royalties taxable support payments received research grants net of related expenses CPP disability benefits received and supplementary unemployment benefit plan payments not
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