Accounts

UNIVERSITY OF NEW BRUNSWICK

Faculty of Business Administration

Personal Financial Planning

ADM 3445 OALP E. Otuteye Assignment 2

Note: Remember to attach this question sheet to your answers when you are submitting the assignment. I do change the questions from time to time and if you fail to add the questions, I might mark your answers against the wrong questions. 1. Kate’s taxable income for 2015 was $72,500. She had a choice between

investing $4,325 of her income in RRSP or investing that same amount in a plan that would give her a non-refundable federal tax credit of $750. Which option should she choose? By how much is she better off in tax saving?

2. For a 35-year old individual who hasn’t made any TFSA contribution since 2009, what is the maximum contribution that he/she can make this year?

3. Use the CRA forms (T1 and necessary schedules) to answer the question. You

need to navigate your way to locate the forms: http://www.cra-arc.gc.ca/menu-eng.html Calculate the Federal tax payable for the year 2015 for Mrs. Smith, given the following information:

Employment income: $142,000 Actual dividends: $6,400 (these are “eligible dividends”)

Employee CPP contribution: $ 920 EI premium: $730 Registered Pension Plan Contribution: $6,800 Union dues: $620

RRSP contribution: $5,000 Prize from winning the lottery: $25,400 Life Insurance benefit payment received: $105,300

Interest income: $18,000 Tuition fees: $5,560 (was in school full time from January to April and part- time from May to August)

Charitable donations: $5,320 Federal income tax deducted: $19,800

(Assume no more CPP contribution is required.)