During the year ending December 31, 2019, Ramona Collins has employment income before the deduction of any RPP contributions of $40,000, a net business loss of $16,000, interest income of $6,000, and income from royalties of $7,000. The royalties were on a book written by Ms. Collins in her undergraduate years at university. She has no Unused RRSP Deduction Room from previous years. She is a member of a Deferred Profit Sharing Plan in which, during 2019, her employer has contributed $3,000 per employee. Her maximum deductible Registered Retirement Savings Plan contribution for 2020 is:

Question

Quizplus · Accepted Answer

To calculate the maximum deductible RRSP contribution for 2020, we need to follow the following steps:

1. Calculate the earned income: employment income + net business loss = $40,000 - $16,000 = $24,000.
2. Calculate the RRSP limit: 18% of earned income = 18% x $24,000 = $4,320.
3. Deduct pension adjustment: $3,000 (DPSP contribution by employer).
4. Deduct any pension adjustment reversals or past service pension adjustments.
5. Deduct any defined benefit past service pension adjustments.
6. Deduct any RPP contributions made in 2020.
7. Deduct any PRPP contributions made in 2020.
8. Deduct any DPSP contributions made in 2020.

Since Ms. Collins has no RPP contributions or other adjustments, her maximum deductible RRSP contribution for 2020 would be $4,320 - $3,000 = $1,320 (Option D).

During the Year Ending December 31, 2019, Ramona Collins Has