RRSP season is nothing to sneeze at
Enough about flu season – it’s time to stop sniffling and start seriously thinking about RRSP season.
The deadline date for making contributions to the Registered Retirement Savings Plan for the 2012 taxation year is just around the corner on March 1.
An RRSP is a plan that helps you save for retirement while offering you some other great tax benefits. For instance, deductible RRSP contributions can reduce the amount you owe on your income tax or even give you a bigger refund (depending on your income). And, as long as the funds remain in the plan they are exempt from tax as it grows.
You don’t have to make one annual lump sum to contribute to an RRSP either. RRSPs can be made easier to carry through monthly payments that suit your budget needs. However, if you are considering making a lump sum contribution before the March 1 deadline but don’t have the on-hand cash, another option is to talk to your financial advisor about an RRSP loan.
You can set up a RRSP through your financial institution such as a bank, credit union, trust company or insurance company. You may also want to consider setting up a spousal or common-law partner RRSP. The bonus to this plan is that if the higher-income spouse or common-law partner contributes to the RRSP for the lower- income spouse/common-law partner then the contributor gets the short-term benefit of the tax deduction while the spouse or common-law partner receives the income and reports it on his or her income tax return.
While we’re on the topic of income tax, the deadline for personal income tax is April 30, 2021 while those who are self-employed have until June 15 unless there is a balance owed and then the deadline is April 30, 2013.
As with everything in life, make sure you do your research and find out more about Registered Retirement Savings Plans and the benefits.
Click on the Canada Revenue Agency link for some helpful information on RRSPs.
Will you be considering contributing to an RRSP this season?
By Donna Donaldson, MSN Money
Posted by: John | Feb 8, 2022 5:50:24 PM
I can't contribute because I have no room outside my company's plan. I already maxed out my TFSA which is limited to an insignificant $5,000 per year (Come on, seriously?). I made a big mistake putting my money into RRSPs for most of my life because the tax bracket I was in was much lower than where I will be when I retire. I now put my money into limited partnerships, which even in bad times have been very good, not to mention that high tax breaks. My refunds are typically in the order of $15,000 to 30,000 per year. I keep getting nasty-grams from CRA about the size of my refunds, but I can never predict how much I will put into tax shelters.
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