Question

neta had total income of $112,000 and earned income of $75,000 in 2022. neta's 2022 notice of assessment reported unused rrsp contribution room of $12,000. neta's t4 showed a pension adjustment of $5,000 in 2022. neta anticipates a pension adjustment of $5,500 in 2023. how much can neta contribute to an rrsp for the 2023 taxation year? multiple choice $13,500 $20,500 $25,500 $27,830

Answer 1

Neta can contribute $20,500 to an RRSP for the 2023 taxation year based on her earned income, unused contribution room, and pension adjustments.

Step-by-step explanation:

Calculation of RRSP Contribution Room for 2023

Neta can contribute to an RRSP for the 2023 taxation year based on the following information:

• Total income for 2022: $112,000
• Earned income for 2022: $75,000
• Unused RRSP contribution room for 2022: $12,000
• Pension adjustment for 2022: $5,000
• Anticipated pension adjustment for 2023: $5,500
  The RRSP contribution limit for 2023 is 18% of the earned income from the previous year (2022), up to a maximum limit set by the CRA for 2023. For the purpose of this calculation, we will assume that the maximum limit is not exceeded. Therefore, Neta's new RRSP room for 2023 would be 18% of the earned income of $75,000, which is $13,500. Subtract the anticipated pension adjustment of $5,500 from this amount to get $8,000. Add this to the unused contribution room of $12,000 from 2022, and Neta can contribute

$20,500

to an RRSP for the 2023 tax year.