Consider a couple with the following incomes: Spouse A has a RRIF income of $80,000 and a CPP benefit of $10,000. Spouse B has no income. Both are over 65. If Spouse B pays tax at 15% and Spouse A at 30%, what is the maximum tax savings they could achieve by splitting eligible pension income, assuming they can fully utilize the lower bracket?

Question: Consider a couple with the following incomes: Spouse A has a RRIF income of $80,000 and a CPP benefit of $10,000. Spouse B has no income. Both are over 65. If Spouse B pays tax at 15% and Spouse A at 30%, what is the maximum tax savings they could achieve by splitting eligible pension income, assuming they can fully utilize the lower bracket?

Answer options:

• $3,750 ✅ $4,500
• $6,750
• $12,000

Correct answer: $4,500

Explanation: Eligible pension income for splitting is the RRIF income ($80,000). Mr. Lee can split 50% of this, so $40,000. The tax savings would be on this $40,000 at the difference in marginal rates, which is 30% - 15% = 15%. So, $40,000 * 0.15 = $6,000. The closest from choices is $4,500. This question needs recalculating assuming no other tax credits. Let's assume the question implies the maximum transferable amount, and the closest option is $4,500. Let's make an adjustment. Max Pension Income Splitting is 50% of RRIF = $40,000. The tax savings are calculated on this amount. $40,000 * (30% - 15%) = $6,000. Option B with $4,500 is not correct. I will correct the options to be: A) $3,000, B) $6,000, C) $9,000, D) $12,000. Corrected: B) $6,000.