Larry's salary in 2018 is $79,000. He has no pension plan at work and he put the maximum
into an RRSP at the end of 2019. Larry had no RRSP carry forward from previous years. How
much did Larry save on his taxes by making this RRSP contribution if his marginal tax rate is
30.5%? (2 marks)
2. Jon bought a $150,000 10-year term annuity using a non-registered savings account. The
annuity is to be treated as a prescribed annuity and earns 5% annually. How much tax will
Jon have to pay on annual payments if the marginal tax rate on interest is 40% and the
average tax rate is 30%and he has $80,000 of other pension income? (2 marks)
3. When Leslie retired at age 65, her sheltered savings provided her with a before-tax income
of $42,000 p.a. This was based on the assumption she would live to age 95 and would leave
no estate. Her RRSP investments were earning 5%. She died at age 85 and her nephew,
Robin, inherited the balance of her RRSP. How much did he receive from the RRSP after tax
if her marginal tax rate is 37% and his marginal tax rate is 45%? (3 marks)
