My husband tax bracket range is 26% plus 10 % in AB = 36%
If he puts $10,000 in RRSP account (after minus this amount, his tax rate is still same), I believe he will get $3600 refund.
However the tax refund amount seems just $3200.
Does anyone know why not $3600? Please advise. Thank you.
Your thinking is correct as far as it goes. When your husband contributes the $10,000, this reduces his Net Income and Taxable Income by the same amount.
If his marginal rate on this amount is 36% , then he will have to pay $3600 LESS TAX.
But this does not mean his refund will be $3600.
His refund is the difference between the total tax he has paid in 2015 , MINUS his tax payable for 2015.
Let us say his tax payable is $25,400, but only $25,000 was paid during the year.
He will still owe $400 for 2015.
He then decides to contribute $10,000, so his tax payable is now 25,400-3600 =21,800
But he still paid 25000, so he is owed a refund of 25000-21800 =3200.
Your thinking is correct as far as it goes. When your husband contributes the $10,000, this reduces his Net Income and Taxable Income by the same amount.
If his marginal rate on this amount is 36% , then he will have to pay $3600 LESS TAX.
But this does not mean his refund will be $3600.
His refund is the difference between the total tax he has paid in 2015 , MINUS his tax payable for 2015.
Let us say his tax payable is $25,400, but only $25,000 was paid during the year.
He will still owe $400 for 2015.
He then decides to contribute $10,000, so his tax payable is now 25,400-3600 =21,800
But he still paid 25000, so he is owed a refund of 25000-21800 =3200.