# Can this be right?



## cjay (Nov 7, 2009)

Thanks in advance for any feedback. I'm doing a retirement cash flow analysis and coming up with 54k/yr income pulled from RRSP and non-reg accounts completely tax-free

Pull 22k per year from RRSP income/dividends tax free under pers exemption of 11k each
Add 24k per year from eligible CDN divs in non-reg
DTC of about 1600 credit
Taxable non-eg dividends of 8k
Tax payable on 8k of about 1600 @ 20%

Result is zero tax paid and 54k income. Marginal rate is only 20 percent (ON) on 40k additional taxable interst/income income over this amount

Idea is to melt or not grow RRSP during retirement until I have to RRIF and structure non-reg for mainly eligible div income. Once I start collecting CPP will be taxable at 20pct.loas and pension age a,out are bonuses.


----------



## 0xCC (Jan 5, 2012)

Don't use combined numbers, look at individual numbers. It looks like you are saying on an individual basis:

$11k from RSPs
$12k from eligible CDN divs
$4k from non-eligible divs
$27k total individual income.

The $11k RSPs falls into the basic personal exemption
The $12k on eligible CDN divs in Ontario actually gives you a -6.86% income tax rate so you get a $823 net tax credit on that amount. The $4k in non-eligible dividends (assuming CDN) results in $214 of tax owing but you have that $823 credit to offset it. So since the dividend tax credit is non-refundable (I think) you won't get the extra $609 as a refund, you just won't have to pay any tax.

Try the numbers out in the calculator here: http://www.taxtips.ca/calculators/canadian-tax/canadian-tax-calculator.htm to see if they in inside the ballpark...

At first glance the numbers see to make sense to me.

Edit: Quickly running the numbers through the taxtips.ca calculator for an Ontario resident and 2015 tax year results in tax payable of $436 each. That is partially the Ontario Health Premium ($300 - thanks Dalton!) and income taxes (federal and provincial) $136. For an average tax rate of 1.61%. Not zero but pretty close...


----------



## OptsyEagle (Nov 29, 2009)

Looks pretty close to me. 

Keep in mind that you did pay some tax. Those corporations you owned paid taxes before they gave you any dividends, so the government is simply saying that is enough for them.


----------

