Old Age Security (OAS) Pension Eligibility Criteria
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Questions and Answers

What does the formula for calculating RRSP contribution room include?

  • Investment income, net rental income from property, and business income
  • The maximum annual RRSP contribution limit
  • Only the previous year's earned income
  • Unused RRSP contribution limit, net changes with respect to pension adjustment, past service pension adjustment, and pension adjustment reversal (correct)

    • How is the annual RRSP contribution limit calculated?

  • Past service pension adjustment
  • Net changes with respect to pension adjustment
  • The maximum annual RRSP contribution limit
  • 18% of the previous year's earned income (correct)

    • Which of the following types of income is not included in earned income for RRSP contribution calculation?

  • Net income from employment
  • Net rental income from property
  • Investment income (correct)
  • Business income

    • What information does the Notice of Assessment (NOA) provide regarding RRSP contribution?

    <p>Reports the RRSP contribution limit for the next tax year</p> Signup and view all the answers

    How does the Canada Revenue Agency assist individuals in determining their RRSP contribution limit?

    <p>By issuing a Notice of Assessment after assessing their tax return</p> Signup and view all the answers

    What type of deductions are considered in the determination of RRSP contribution room?

    <p>Those related to Registered Pension Plans (RPP) or Deferred Profit Sharing Plans (DPSP)</p> Signup and view all the answers

    What does a Defined Benefit Pension Plan (DBPP) define?

    <p>The retirement income a client will receive</p> Signup and view all the answers

    How are employees' average pensionable earnings calculated in a DBPP?

    <p>Based on their best earning years with the employer</p> Signup and view all the answers

    What is the tax bracket mentioned in the text that Priscilla falls within?

    <p>40 percent</p> Signup and view all the answers

    What is the formula used in a DBPP to calculate the benefit?

    <p>$\text{Accrual Rate} \times \text{Average Pensionable Earnings} \times \text{Years of Service}$</p> Signup and view all the answers

    What does the accrual rate represent in a DBPP?

    <p>The percentage used to calculate the benefit entitlement</p> Signup and view all the answers

    If Priscilla's annual contribution is $10,000, how much will it reduce her taxes payable by?

    <p>$4,000</p> Signup and view all the answers

    On what is an individual's average pensionable earnings typically based in a DBPP?

    <p>Their earnings during their career with the employer</p> Signup and view all the answers

    What can Priscilla do with any remaining RRSP contribution room?

    <p>Invest in non-registered savings plan</p> Signup and view all the answers

    How is a Defined Benefit Pension Plan (DBPP) different from other retirement plans?

    <p>It guarantees a known benefit at retirement</p> Signup and view all the answers

    What benefit do Priscilla's RRSP contributions provide aside from tax-sheltered growth?

    <p>Tax deductions</p> Signup and view all the answers

    What does the number of years of credited service refer to in a DBPP calculation?

    <p>The time an employee has worked under the plan and received benefits</p> Signup and view all the answers

    What happens to Priscilla’s registered account upon withdrawal?

    <p>It becomes taxable</p> Signup and view all the answers

    Why will Priscilla have a greater tax obligation compared to Miguel when withdrawing funds?

    <p>Priscilla's account has a higher dollar amount</p> Signup and view all the answers

    What does the Income Tax Act restrict in relation to RRSPs?

    <p>Types of investments allowed</p> Signup and view all the answers

    What is the minimum age requirement to be eligible for full OAS pension benefits?

    <p>65 or older</p> Signup and view all the answers

    Which of the following individuals is eligible for 100% of the OAS pension benefit?

    <p>A Canadian citizen who lived in Canada for 35 years after age 18</p> Signup and view all the answers

    What is the rate at which a partial OAS pension is calculated?

    <p>1/40th of the full OAS pension for each year of residence in Canada</p> Signup and view all the answers

    In addition to being at least 65 years old, what other major eligibility criteria must a non-resident meet to qualify for the full OAS pension benefit?

    <p>Having lived in Canada for a minimum of 20 years after age 18</p> Signup and view all the answers

    What is the least number of years an individual must have lived in Canada after age 18 to qualify for any amount of OAS pension benefit?

    <p>10 years</p> Signup and view all the answers

    If a non-resident wants to qualify for partial OAS pension benefits, how many years must they have lived in Canada after turning 18?

    <p>20 years</p> Signup and view all the answers

    What is the main difference between the eligibility criteria for residents and non-residents to receive the full OAS pension benefit?

    <p>Residents must have lived in Canada for 40 years after age 18 while non-residents must have lived for 20 years after age 18</p> Signup and view all the answers

    In what scenario would Jon and Craig have accumulated a similar total in their managed RRSP accounts?

    <p>If they both contributed the maximum amount to their RRSP for 20 years</p> Signup and view all the answers

    Based on the information provided, what can be inferred about the impact of earning potential on RRSP contributions?

    <p>Higher earning potential generally leads to higher RRSP contribution limits</p> Signup and view all the answers

    What is likely the reason behind the mention of Canada's progressive tax system in the text?

    <p>To highlight the benefits of contributing to a spousal RRSP</p> Signup and view all the answers

    Why did Craig have a lower maximum RRSP contribution limit compared to Jon?

    <p>Due to his part-time employment status</p> Signup and view all the answers

    How does contributing to an RRSP impact the minimum withdrawal requirement under current legislation for Jon and Craig?

    <p>It increases the minimum withdrawal requirements for both individuals</p> Signup and view all the answers

    What impact does setting up a spousal RRSP have on the couple's total retirement savings?

    <p>It helps maintain similar total savings in their respective RRSP accounts</p> Signup and view all the answers

    Why does Jon have to make larger minimum withdrawals than Craig at some point in the future?

    <p>Due to differences in their managed RRSP savings over time</p> Signup and view all the answers

    What financial benefit do spouses with different incomes gain from building two similar pools of savings?

    <p>They can benefit financially under Canada's tax system</p> Signup and view all the answers

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