Kevin just turned 18 years old on February 18, 2022, and received money from his parents, aunts, and uncles. In total he had $2,000 and wanted to invest it. He has always saved his money and started saving at the age of 15 when he started working at his fathers company, but until now, has only put it in his savings account. Kevin went to the Canada Revenue Agency (CRA) site under My Account after he filed his 2020 personal income tax return to confirm his contribution room for both a Registered Retirement Savings Plan (RRSP) and a Tax-Free Savings Account (TFSA). He however is in a dilemma to know which one to contribute to. He is going to his bank next week to open both accounts and will decide then. His total contribution will be the $2,000 from his birthday and his previous savings of $3,000 when working with his father during summers. He will invest the $5,000 and then withdraw it all on December 15, 2022, to buy a touring bike for his trip to Australia that he will be taking over the holidays.

c. When it comes to RRSP and TFSA, Kevins father, George has simply transferred the amounts to both plans based on what his tax advisor recommends. George has always contributed the maximum to both his RRSP and TFSA on January 1^st each year, but without quite understanding how either the RRSP or TFSA work. He has therefore asked Kevin to work out a few scenarios for him to help him better understand.

+ TABLE C Tax-Free Savings Account (TESA): Annual Limits Years Annual Limit Years Annual Limit Year started 2009 - 2012 $5,000/year 2016 - 2018 $5,500/year 2013 - 2014 $5,500/year 2019-2022 $6,000/year 2015 $10,000/year 2023 $6,500/year (estimated) TABLED Registered Retirement Savings Plan (RRSP): Annual Limits Formula for RRSP contribution limit: 18% of your previous year's earned income less your previous year's pension adjustment to an annual maximum. Annual maximum contribution limit $26,500 2020 $27,230 2021 $27,830 2022 29,210 Year 2020 a) Based on the information above, which would be the recommended account for Kevin to contribute to with regards to either an RRSP or TFSA, and the reason? (.5 marks) b) Kevin's mother thought her son was quite clever in investing his money. She does not understand how an RRSP or TFSA work and asked Kevin to help determine her contribution room for both accounts. Do not forget to consider her carryforward amounts (if any). (1 mark --5 marks) Kevin's mother: (currently 40 years old, birthday is May 3rd): graduated from university in April 2000 but decided to stay home to raise Kevin; she never had a full or part-time job and is not planning on doing so as she spends endless hours volunteering with many charities in her community; and to date has never contributed to her RRSP nor to her TFSA. 2022 RRSP Contribution room for Kevin's mother: (.5 marks) 2022 TFSA Contribution room for Kevin's mother: (.5 marks) + TABLE C Tax-Free Savings Account (TESA): Annual Limits Years Annual Limit Years Annual Limit Year started 2009 - 2012 $5,000/year 2016 - 2018 $5,500/year 2013 - 2014 $5,500/year 2019-2022 $6,000/year 2015 $10,000/year 2023 $6,500/year (estimated) TABLED Registered Retirement Savings Plan (RRSP): Annual Limits Formula for RRSP contribution limit: 18% of your previous year's earned income less your previous year's pension adjustment to an annual maximum. Annual maximum contribution limit $26,500 2020 $27,230 2021 $27,830 2022 29,210 Year 2020 a) Based on the information above, which would be the recommended account for Kevin to contribute to with regards to either an RRSP or TFSA, and the reason? (.5 marks) b) Kevin's mother thought her son was quite clever in investing his money. She does not understand how an RRSP or TFSA work and asked Kevin to help determine her contribution room for both accounts. Do not forget to consider her carryforward amounts (if any). (1 mark --5 marks) Kevin's mother: (currently 40 years old, birthday is May 3rd): graduated from university in April 2000 but decided to stay home to raise Kevin; she never had a full or part-time job and is not planning on doing so as she spends endless hours volunteering with many charities in her community; and to date has never contributed to her RRSP nor to her TFSA. 2022 RRSP Contribution room for Kevin's mother: (.5 marks) 2022 TFSA Contribution room for Kevin's mother: (.5 marks)