| |
Maximizing tax benefits of your RRSPs
RRSPs were discussed at some length in the section
on Retirement Planning. For most people, they represent the
best and easiest way to practice a tax efficient investment
strategy.
Here are a few suggestions on how you can maximize the tax
advantages offered by RRSPs.
Make your contributions early in the year so you
can maximize the benefit of deferring taxes on income earned
within the RRSP Consider making an over-contribution of up to $2,000
to your RRSP. Although it won’t be deductible from your
taxable income, it will add to the tax deferred income earned
in your RRSP. And the earlier you do this the better. If you are over 69 (remember, you can’t make
RRSP contributions after 69) and you have earned income, make
spousal RRSP contributions if your spouse is under 69 If your income is unusually low in one year, make
your contribution anyway but don’t take the deduction
until a future year when your income is higher Remember that even if you have no earned income
in the current year, but do have RRSP room carried forward
because of income in the previous year, you can contribute
to your RRSP Because dividends and capital gains are taxed favourably,
consider holding investments that can provide them outside
your RRSP and hold interest-bearing assets (which are taxed
at your marginal rate) in your RRSP
Important information about our financial planning services can be found at the bottom of our
homepage.
|
|
