Since Janice was not working in 2013, she then decided to withdraw ,000 from her RRSP to supplement her income. When you combine spousal RRSP dollars with regular RRSP dollars, the entire plan becomes a spousal RRSP subject to the rules around spousal plans (most notably, any withdrawals from a spousal plan can be taxed in the hands of the contributing spouse to the extent that spouse made contributions in the year of the withdrawal or the preceding two years).
The result is that the full ,000 Janice withdrew from her RRSP will be taxed in the hands of her husband, who is in the highest tax bracket. Janice should have avoided combining her spousal and regular RRSPs.
The problem is that Michael could face tax on all or part of the withdrawals that Marnie makes from her RRSP later. The Canada Revenue Agency has said that an RRSP is considered to be "property" under our tax law.
Therefore, any withdrawals from an RRSP are considered to be "income from property." The attribution rules found in subsection 74.1(1) of our tax law apply to income from property and will attribute that income back to the spouse who gave the cash to acquire the property.
Their issue — can they translate present affluence into stable retirement income of ,000 a year after tax? “If that is the future, should we pay down our debts or add to RRSPs?
They expect an interest rate of six per cent after inflation, a rate that would support high bond returns and perhaps bullish stock returns. ”Family Finance asked Mathew Hall, a financial planner and Chartered Financial Analyst with Exponent Investment Management Inc. His answer – six per cent interest on GICs or investment grade bonds after inflation is out of reach.
By the way, the capital losses in this case will be realized in 2014 (not 2013), but he'll be able to carry those losses back to 2013 when he files his 2014 tax return next year.
He'll be able to claim an RRSP deduction in 2013, however, provided he makes a contribution within his contribution limits on or before March 3, 2014. 2 Janice's husband contributed ,000 to a spousal RRSP for Janice in 20.
This will provide him with both capital losses he can use and an RRSP deduction.
I think about Joseph O'Callaghan, who robbed the guard of an armoured car in 2011.
He stole the guard's cash box, was caught, and was sentenced to nine years in prison by a court in Belfast.
Michael would be better to contribute to a spousal plan for Marnie, or lend her the money at the prescribed rate (currently 1 per cent) to avoid this attribution.
The original newspaper version of this story stated that the RRSP deadline is March 1, 2014.