Question

30 steve and irene are a couple in their mid - 60s. they meet with their advisor to plan their retirement income. they have a registered annuity, a registered retirement income fund (rrif), and a deferred profit sharing plan (dpsp) annuity. they are both eligible to receive old age security (oas) benefits and benefits from the canada pension plan (cpp). which of the following incomes will the advisor most likely recommend for income splitting?
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a. registered annuity payments, oas benefits, dpsp annuity payments, and rrif income
b. registered annuity payments, cpp benefits, dpsp payments, and oas benefits
c. registered annuity payments, oas benefits, and rrif income
d. registered annuity payments, rrif income, cpp benefits, and dpsp annuity payments
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Explanation:

To determine the correct answer, we analyze income splitting eligibility in Canada:

• OAS (Old Age Security) benefits and CPP (Canada Pension Plan) benefits are generally not eligible for income splitting.
• Registered annuity payments, RRIF (Registered Retirement Income Fund) income, and DPSP (Deferred Profit Sharing Plan) annuity payments are eligible for income splitting.

Now let's analyze each option:

• Option a: Includes OAS benefits (not eligible), so incorrect.
• Option b: Includes CPP and OAS benefits (both not eligible), so incorrect.
• Option c: Includes OAS benefits (not eligible), so incorrect.
• Option d: Includes registered annuity payments, RRIF income, CPP benefits (wait, no—wait, correction: Wait, actually, CPP benefits are not eligible for income splitting, but wait, no—wait, the eligible ones are registered annuity, RRIF, DPSP annuity. Wait, maybe my initial thought was wrong. Wait, let's re - check. In Canada, for income splitting in retirement:
• Registered annuities (from registered plans), RRIF income, and DPSP annuity payments are eligible. CPP and OAS are not eligible for income splitting. Wait, but option d includes CPP benefits? Wait, no, maybe I made a mistake. Wait, let's re - evaluate the options:

Wait, the question is about which incomes the advisor will most likely recommend for income splitting. Let's recall the rules:

• Eligible for income splitting: Registered annuity payments (from registered plans), RRIF income, DPSP annuity payments.
• Not eligible: OAS benefits, CPP benefits.

Now let's check each option:

• Option a: OAS benefits (not eligible) included. Eliminate.
• Option b: CPP and OAS benefits (not eligible) included. Eliminate.
• Option c: OAS benefits (not eligible) included. Eliminate.
• Option d: Registered annuity payments, RRIF income, CPP benefits (wait, no—CPP is not eligible. Wait, this is confusing. Wait, maybe the options have a typo, or my understanding is wrong. Wait, maybe CPP benefits are eligible? No, according to Canadian tax rules, CPP and OAS are not eligible for income splitting. But among the options, option d is the only one that does not include OAS or has the least ineligible. Wait, no—wait, let's re - check the options again.

Wait, the options:

a. Registered annuity payments, OAS benefits, DPSP annuity payments, and RRIF income → OAS is ineligible.

b. Registered annuity payments, CPP benefits, DPSP payments, and OAS benefits → CPP and OAS ineligible.

c. Registered annuity payments, OAS benefits, and RRIF income → OAS ineligible.

d. Registered annuity payments, RRIF income, CPP benefits, and DPSP annuity payments → CPP is ineligible, but the other three (registered annuity, RRIF, DPSP annuity) are eligible. The other options have OAS (which is ineligible) included. So even though option d includes CPP (which is ineligible), it's the best among the options because the other options include OAS (which is also ineligible) and more ineligible components. So option d is the least bad (or correct) among the given options.

Answer:

d. Registered annuity payments, RRIF income, CPP benefits, and DPSP annuity payments