Question 14 (15 marks)

Diana Dundastard is employed by Dundas Processing Ltd. (DPL), a Canadian-controlled private corporation. The following information pertains to her income over the past two years:

2020 2019

Salary before benefits $115,000 $107,000

Employee stock option benefit 17,000 14,000

Deemed interest employment benefit 5,000 6,000

Registered pension plan contributions (5,500) (5,200)

Other deductible employment expenses (6,500) (6,000)

Interest income 2,000 1,500

Taxable capital gain 13,000 8,000

Business income 35,000 26,000

Royalty income from book 18,000 15,000

Rental loss before capital cost allowance (6,000) (11,000)

Spousal support payment (17,000) (14,000)

Dividend on DPL stock 1,000 1,200

Net income $171,000 $142,500

Diana participates in DPLs money-purchase registered pension plan. DPL contributes an amount that matches the amount contributed by an employee to the plan. Her pension adjustment is $10,400 for 2019 and $11,000 for 2020.

Diana has never contributed to a registered retirement savings plan (RRSP), although she had enough income to entitle her to contribute the maximum allowed in 2017 of $26,010; 2018 of $26,230 and 2019 of $26,500. In those years she was not enrolled in the company pension plan.

The royalty income listed above is computed at 3% of the sales of a utensil that she invented. The business income listed above is earned from lingerie party sales that she makes in her spare time.

Required (Show all calculations):

(A) Calculate Dianas earned income for the purpose of determining her maximum 2020 RRSP contribution by listing the items and amounts that would be included in her earned income. List separately the items that are not included in the earned income calculation.

(B) Based on the above information, calculate Dianas maximum deductible RRSP contribution for 2020.