QUESTION 2: Joe Chan earns $90,000 per annum. He would like to take one year off to spend some time with his parents who live in Singapore. He can take one year unpaid leave from his job starting January 1, 2013 or starting May1, 2013. From an income tax point of view, which date should he choose if he finances his time off by 1. Cashing $90,000 of his savings from an unsheltered (non RRSP) account 2. Withdrawing money from his RRSP account Use the following tax rates to determine after tax amount under each option: Federal and Ontario Personal Tax Rates, Brackets and Surtaxes Jurisdiction Bracket ($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 $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 QUESTION 2: Joe Chan earns $90,000 per annum. He would like to take one year off to spend some time with his parents who live in Singapore. He can take one year unpaid leave from his job starting January 1, 2013 or starting May1, 2013. From an income tax point of view, which date should he choose if he finances his time off by 1. Cashing $90,000 of his savings from an unsheltered (non RRSP) account 2. Withdrawing money from his RRSP account Use the following tax rates to determine after tax amount under each option: Federal and Ontario Personal Tax Rates, Brackets and Surtaxes Jurisdiction Bracket ($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 $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