OAS CPP

Question 1

1. As long a syou lived in Canada for at least 20 years after reaching age 18, OAS pension will continue definitely even if you leaves Canada for extended period.
   a.

Answer 1

If you didn’t live in Canada for 20 years, payment for first 6 consecutive months of absence from Canada, resume in the month return to Canada

Question 2

3. OAS claw back rate is 15% –OAS threshold, is the income at which pensioner’s OAS benefit will begin to clow back

Answer 2

a. OAS cut off is based on Net income

b. OAS benefits based on previous income, same as child benefts

Question 3

4. You 66 years of age, has 5000 CPP pension plan income and live in Saskatoon. You want to do part time job with partial income of $14,600 per year. Under the GIC earning exemption prior to the enhancement, You would only get to keep about 6650 of this 14600 from the part time job after GIS benefit clawback, federal and provincial tax and tax credits and other benefits are consider
   With the enhancement to GIS earnings exemption, what would be the amount of your client’s GIS earnings exemption?

Answer 3

The full exemption +50% (lesser of 10,000 and (annual employment income-5000))
In this case, it is 5000+50%X9600=9800

Question 4

7. Non pensionable employment income

Answer 4

a. Earn less than 3500
b. Migratory workers who do not work at least 25 days/who do not earn at least 250 per year from the same employer
c. Casual workers, such as babysisters,
d. Members of religious orders who turn their entire income over to their order

Question 5

8. You become parents, you stay at home to take care of kid till kid go to kindergarten.
   In considering use of the child-rearing drop out, what would you advise your clt

Answer 5

• Learnings : The child-rearing drop out CRDO provision is a provision of the CPP legislation that permits you to exclude a period of up to 7 years for each child for years during which you were raising that child from your contributory period for the base CPP

Question 6

9. You have corporation, turned 64 y/o and commenced to receive CPP retirement. Had no need to accumulate additional funds in registered retirement savings plan.
   The corporation’s taxable income before compension will not exceed 400,000 and you will take compensations salary or dividend to provide an fter tax income of 150K

Answer 6

• ## You could take the compensation as dividends and avoid having to make CPP contributions

Question 7

12. CPP death benefit

Answer 7

a. Either estate or surviving spouse will receive a death benefit of 2500
b. Death benefit is not automatic. The estate or spouse must apply to receive the benefit
c. In order for the heirs of a deceased CPP contributor to be eligible to receive CPP death benefits, survivor’s pensions and orphan’s benefits, the deceased contributor must have made CPP contributions for a min. qualifying period.
d. The CPP minimum qualifying period is
i. At least one third of the number years in CPP contributory period, in no case for less than 3 years, or
ii. At least 10 years
iii. Calculation- ( Current age – 18 +1)/3’

Question 8

16. The Amount of Disability pension is the amount calculated as The LESSER of

Answer 8

a.max monthly CPP disability pension and
b. A flat rate component +75% of the CPP retirement pension which you would have been entitled if you could have retired at the time of your disability
c. In 2018, the maximum monthly CPP disability pension is 1335 and the flat rate component is 488.2
a

Question 9

If you remarry, you will lose SURVIVOR’s Allowance UNDER OAS

you will not lose Survivor’s pension under CPP

Answer 9

Your kid, if below 18 or untile age 25 if go the school full time, kid will not lose Orphan’s benefit

Question 10

The GIS new EXEMPITON excluded the first 5000 of person’s employment and self employmnet income as well as 50% of Income great that 5000, but less than 15000

Answer 10

if your income would be 14600. your GIS exemption would be 5000+50% (less of 10000 and (14600-5000))
= 5000+0.5X9600=9800

Question 11

OAS, GIS and ALLOWANCE benefits are all included when computing the net income, which in turn is used to asses the your eligible for various tax credits.

However, the GIS and Allowance benefits are subsequently deducted before determine taxable income –so they are not subjec tto income tax

Answer 11

CPP retirmeent beneftis included into taxpayers net income, not deducted before determine taxable income

Question 12

You Marginal tax and OAS clawback rate is

0.85* MTR +15%

Answer 12

or MTR+OAS clawback rate X(1-15%)

Question 13

if you earn less 3500,
or migratory work do NOT work at least 25 days per year

or casual work, such as baby sitter

member of religiousorders who turn all entire income over to order

YOu dont need to pay CPP

Answer 13

CPP 2021 , 5.7 %, YBE is 3500

Question 14

If you still working after 60 years, must do CPP contribution
if you work after 65, flexible
You should pay CPP from 18 to 65

Answer 14

Child rearing dropout for CPP, only the caring mother or father can apply for CRDO
- CRDO could help meet the eligibility requirments for a disability benefits

Question 15

Tax Credit for Pension Income is non refundable, who receive eligible pension income
15% of eligible of fed pension income…max amt of tax credit is 2000

Answer 15

Eligible pension income would be

• annuity from LIife annuity
• Annuity form RRSP/RIF/DPSP

the annuity payment from matured RRSP, but you are younger than 65, not eligible pension
- OAS

Question 16

in case of sale FMV to spouse or common law, the taxpayer must also ELECT not to have the automatic SPOUSAL ROLLOVER rules apply if wants to avoid INCOME tax attribution

Answer 16

You can deduct the total carrying charges and interest expense to investment portfolio

• counselor fees for investment
• accountant fee

Question 17

1. OAS age I s65, can be taken early at a reduced amt?

a. No, possible with CPP, but not OAS

Answer 17

CPP contribution is non-refundable tax credits

CPP benefits are taxable, OAS is taxable

only the guaranteed income supplement GIS, which is payable to anyone who is receiving OAS and can prove that their income is below a very low threshold

Question 18

Post retirement benefit PRB?
a. The post retirement benefit PRB is an extra amount that is paid to those who are btw 60 and 70 year old, have retired and are receiving CPP, but still continue to work and therefore contribute to CPP, even though they are collecting CPP pension
b.

Answer 18

If you retired and is already receiving CPP, but is working again and is still contributing, there must be sth more in it for them. The post retirement benefit addresses this

Question 19

wants to receive CPP at age 65, do you need to apply?

a. YES, at least 3 months, but no more than one year in advance of when they wish CPP payments to commence

Answer 19

15. When a CPP pensioner dies, a lump-sum payment is issued to the estate or in the absence of an estate, to the individual who paid for the final expense. How is death benefit calculated?
    a. The payment is = 6 times the actual retirement pension that the deceased would have received, to a maximum of 2500

Question 20

17. How would one qualify for the “Allowance for the Survivor”?

Answer 20

a. The allowance fo the Survivor provides income for Seniors who have a spouse or common law partner who has died. To qualify
b. You must be aged 60-64, have been resident of Canada for at least 10 years after the age of 18, must rely each year
c. The Allowance stops at age 65, since you would then qualify for regular OAS

Question 21

GIS income test

a. The income test includes the follow
i. Employment Income
ii. Employment insurance benefits
iii. CPP/QPP benefits
iv. Private Pension income, domestic and foreign
v. Investment income, interest, dividends, capital gains..etc
vi. Rental income
vii. RRSP money that is withdrawn, coz it is taxed as regular income
viii. Spousal support income

Answer 21

18. What happens if you leave Canada after you start receiving OAS benefits?
    a. If you have lived in Canada for at least 20 years after reaching age 18, you will receive OAS benefits for life, no matter where you live.

b. If not, the OAS pension will be paid only for the month that you departed Canada + six additional months, the benefits will be reinstated upon your return to canada and meet all requirements to receive the pension again

Question 22

6. If CPP contributor dies, how much would a surviving spouse receive if he/she is between the ages of 35 and 45 and have no dependent children?

Answer 22

a. Would receive a flat-rate benefit +37.5% of the deceased contributor’s pension or what it would have been if the pensioner was 65 at the time of death.

This amt is reduced by 1/120th for each month that the spouse was less than the age 45 at the time his or her spouse died

Question 23

20. You lived in Canada entire life exception the last 4 years, you lived in Australia. Just returned home at the age of 65, would you qualify for OAS if apply today?
    a. No, not eligible, coz he lived in another country in the last year prior to application

Answer 23

g. Things to know about CPP disability benefits:
i. The benefit is comprised of a flat rate component+ 75% of what the contributor would receive as a pension if you reached age 65
ii. Disability benefits begin 4 months after the disability occurred and will continue till the person recoverers, retires or dies
iii. The 4 month period is waived if the disability occurred within 5 years of previous disability.
iv. Contributor’s unmarried dependant who are under age 18 and still attending school full time will receive benefits
v. CPP disability benefits are taxable.

Question 24

CPP disablilyt - severe and prolong for ANY job, not regular job

Orphan’s benefit –18 younter or full time study , and
CPP also has benefits for disable contributor

Answer 24

To receive CPP death benefit, there is length of contribution limits.
if you 35 yes contribted to CPP for the last 6 years
- yes, as you meet 35-18+1=18, 1/3 of 18=6, you contribute 6 years
If you are 45 years, contribute CPP for the last 8 yeear
- 45-18+1=28, 1/3 of 28 is 9.33, you must contritue 9 .33 years

CPP has Minimum qualifying period of 10 years , or 1/3 of you age -18+1

Question 25

You die, your estate or Spouse can receive CPP death benefit, but must applt

Answer 25

When calculate CPP split in Marriage before seperateion , if you live togeter in May 2017, married on Dec 2018, seperation in Feb 2022
- you must split from 2017 to 2020, Jan 2017 to Dec 2021, 60 months

Question 26

Base CPP pension, retirement benefit of 25% of your average monthly pensionable earnings

2022 base CPP is 4.95%, first addtional is 0.75%=5.7%,

• FIrst addtional could be 8.33, second addtion could be 14%
  if your contributions to the enhanced protion of CPP, deductible for income tax purpose, rather an eligible for tax credit
• you can expext retriement beneft at 65 years will be 25% or 1/3 of 114% of YMPE

you can expect CPP contribution rate for earnings above the YMPE to be 4%

Answer 26

Disablility of PEnsion = Lesser of 1.monthly CPP max disability pension and 75% of CPP retirment pension

Question 27

YMPE 2022 is 64900, Base CPP cont rate 4.95% for employee and employer and First addtion is 0.75 for Employee and emplyer, you are in the province with conversion rate for the CPP contrbituion tax cretit rate 9.8%, Fed is 15%

Your self employed, income is 82,000 and MRT is 38%

Answer 27

How much is your total tax relife

• you pay CPP (64900-3500) X 4.95=3039.3, employer protion 3039.3 total 6078.6
• you pay first addition 0.75%, 460.5, employer, total 921
• you base CPP contrbiution get fed and pro tax credit 6078..6X(15%+9.8%)=1507.49/2=753.75 tax credit
• first additonal get employee tax deduciton 921/2=174.99
• your bussiness also get 6999.6/2*0.38

Question 28

Y2022
Money Purchase MP limit 30780
DB limit 1/9 the money purchase limit 3420
RRSP dollar LIMIT 29210 (which is the year before 2021 MP)

DPSP- deferred Profit Sharing Plan (1/2 MP limit) - 15390

ALDA–Advanced Life deferred Annuity ALDA - 160,000

YMPE 64900

Answer 28

cpp EXEMPETION - YBE 3500, Casual worker (baby sitting) or Migratory Workers (Seasonal job of farming, work less than 40 days)

Question 29

CPP drop out provision–remove periods of low earnings, raise kids…17%

Answer 29

Calculate CPP–Basic Retirement Benefit 25% of average YMPE for Current year and 5 previous years X Average earnings rato

• average earnings Ratio–Unadjusted pensionable earnings / YMPE
• Max monthly CPP at 65 in 2022 is 1253.9 year 15046

Question 30

60-65 if working, must continue making CPP contributions till 65

65 optional to CPP contributone–you may elect not to contuine CPP contribution

Answer 30

CPP disability benefits

• contributed 4 of last 6 years and eared at least 10% of YMBE
• Prolong and severed phisical and mental impairment that prevents you from working regularly at ANY JOB
• must Apply in Writing, max 12 months retroactive and CPP benefits being 4 months after CPP considers Applicant as having become disable

Question 31

Death penefit

• lesser of 2500
• 10% of YMPE
• six times age 65 monthly pension

Survivor protection
Children benefit

Answer 31

CPP tax
- Employee contribution —not tax deductible expsnse,,Can claim as NOn-Refundable Fed and PROV tax Credits

• Employer contri — Deductible business expense, not taxable benefit to employeee