Questions & Answers

Valuing assets

When valuing assets for divorce is the after tax value used? An example, marital assets include a house valued at $400,000 and RRSP’s with a pretax value of $400,000, but after tax the value is only $240,000 assuming a 40% tax rate. Which value is used for the RRSP’s?

— jamie d.

Answer

Excellent question. We would deduct the "notional taxes" on the RRSP's. But the tax rate is your tax rate in retirement so it is usually substantially less than 40%. Often it is in the range of 17% to 25% because your income in retirement will be less. Also we use the effective tax rate after all the deductions. I hope this helps. Please consider booking a consultation to get more answers directly from our lawyers.

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