Question

Meg makes RRSP contributions resulting in a tax rebate of $1200 each year. She is in a 30 percent tax bracket. What was the amount of her contribution?

A) $3000
B) $4000
C) $22 222
D) Unknown

Answer 1

Meg's contribution to her RRSP that resulted in a $1200 tax rebate is $4000, calculated by dividing the tax rebate by her tax rate of 30 percent.

Step-by-step explanation:

The student's question is based on understanding tax rebates and how it relates to Registered Retirement Savings Plan (RRSP) contributions. In this example, Meg receives a $1200 tax rebate which corresponds to her being in a 30 percent tax bracket. The amount of her contribution can be calculated by dividing the tax rebate by the tax rate percentage, which is 0.30 in this case. Thus, her contribution (C) is calculated as follows:

C = Tax Rebate / Tax Rate

C = $1200 / 0.30

C = $4000

Therefore, the amount of Meg's contribution to her RRSP that resulted in a $1200 tax rebate is $4000, which corresponds to option B).