Cindy Crawford is a media consultant with JJ Consulting Group. Her salary is $100,000 per annum. She would like to take one year vacation to travel all over the world. JJ has agreed to give her a one year unpaid leave from her job, starting either immediately on January 1, or on April 1 following. From an income tax point of view, which date should she choose if she finances her vacation by 1. Cashing $100,000 of Canada Savings Bonds in an unsheltered account 2. Cashing $100,000 of funds from her RRSP account, consisting of $50,000 in principal, $30,000 in capital gain $14,000 in interest income and $6,000 in dividend income.

Use the following tax table to evaluate the options:

Federal and Ontario Personal Tax Rates, Brackets and Surtaxes

Jurisdiction Bracket ($s) Tax Rate

Federal $42,707 or less 15%

$42,708 -85,414 $6,406.05 + 22% on next $42,707

$85,415-132,406 $15,801.59 + 26% on next $46,992

Over $132,406 $28,019.51 + 29% on income over $132,406

Ontario $39,020 or less 5.05%

$39,021-78,043 $1,970.51 + 9.15% on next $39,023

$78,044-500,000 $5,541.11 + 11.16% on next $421,957

Over $500,000 $52,631.51 + 12.16% on income over $500,000

No Surtax at Federal level.

Ontario Income Tax < $4,213 surtax =$0

Ontario Income Tax $4,213-5,392 surtax = 20%

Ontario Income Tax > $5,392 surtax = $236 + 56% of Ontario Income Tax above $5,392

Dividend Gross up is 38%. Dividend tax credit is 20.73% at the federal level and 8.83% at the Ontario level

of the actual dividend