So, if you don’t currently pay a high rate of tax, it might be in your best interest to save some or all of your contribution deductions for a future year when you are making more money and paying a higher overall tax rate. If you use this strategy, you’ll still need to claim...
RRSPs were created in 1957 as part of the Canadian Income Tax Act.They are registered with the Canadian government and overseen by the Canada Revenue Agency (CRA), which sets rules governing annual contribution limits, contribution timing, and what assets are allowed. RRSPs have two main tax ...
Individual RRSP: This is the most popular type of RRSP and is designed for individuals who have earned income. Contributions made to an individual RRSP are based on a percentage of your income, with a maximum annual contribution limit set by the government. Spousal RRSP: A spousal RRSP allows...
Second, the contribution has long-term growth potential, depending on your investment strategy. Generally, if the RRSP’s growth rate is more than the interest rate you’ll pay, the loan can make good financial sense. It’s even better if your tax refund is enough to pay off the borrowe...
If you are paying yourself a salary of more than $120,000 or so, and are over the age of 40, then an IPP is worth your consideration. Why over the age 40? It’s a bit complicated to fully explain, but the gist of it is that the IPP contribution rules are based on actuarial rul...
Spousal RRSP Contribution Rules are Very Simple Let’s say early on in their marriage, Monica earns a higher income than Terry. Monica therefore, has a higher RRSP contribution and deduction limit. Terry can open a Spousal RRSP with himself as the account holder (AKA:annuitant) and set Monica...
Your $60,000 RRSP contribution will count as a tax deduction this year. Use any tax refund you receive to repay the RRSP or other expenses related to buying your home. But remember, you will have to pay that amount back to your RRSP over the next 15 years. ...
If you're saving for a new home, a good strategy can be to use the money from your RRSP to help pay for your down payment. The amount withdrawn can be paid back into the RRSP through instalments over a 15-year period. Look at the different scenarios below. Both Samantha and John are...
Contributions made by your employer to your RPP may also impact your RRSP contribution limit. Non-Registered Accounts Non-registered accounts can also be used to save up for retirement. These accounts allow you to invest in a wide variety of investments, so you are not necessarily restricted to...
Your contribution room carries forward year-over-year. Benefits of a RRSP: Ideal for a long-term investment; Intended to help Canadians prepare for retirement; Income earned within an RRSP is not taxed until withdrawal; Money invested (subject to some restrictions) reduces your taxable income, wh...