Tax saving Tips with RRSP, RESP, RDSP, TFSA and others
RRSPs and TFSAs are amazing tax shelters that can help you hold onto thousands of dollars of your hard-earned money every year. The RRSP lets you defer paying taxes on a portion of your yearly income until you retire in a lower tax bracket—which will be true for most people.
Maximize your RRSP or TFSA contribution limits. Keep in mind that the investment interest you get from bonds and GICs is taxed at a higher rate, so in general, put your fixed-income investments in the tax shelter, and keep your stocks and dividend payers outside.
Make contributions to it in the name of your lower-earning partner. You’ll get the same advantage as if you were putting income into your own RRSP (a tax refund on contributions), but here’s the kicker: when the money is later withdrawn, it will be taxed in your lower-income spouse’s hands at a lower rate.
- Just be aware of the Canada Revenue Agency’s attribution rules: you can’t make a contribution in the same year you withdraw the money, or in either of the two previous tax years.
Plus, the total combined contributions to your own RRSP and your spouse’s RRSP cannot exceed your own deduction limit.
- Registered retirement savings plans (RRSPs) are the government’s weak apology for gouging citizens on their taxes.
- You may as well use the bone they throw you and get the most out of this chance.
- When speaking about borrowing to buy investments, maxing out your RRSP is usually a sensible decision provided that
you are able to service the loan in a reasonable period of time.
And unlike RRIFs, there are no forced annual withdrawals.
Each member of a senior couple can invest $5,500 into his or her TFSA annually, meaning the two of you can convert $11,000 worth of RRIF withdrawals and non-registered savings into TFSAs each year.
For eligible Canadians, money placed in a Registered Disability Savings Plan (RDSP) grows tax-free and can net a staggering 300% return.
What would you say if someone offered a 20% return on every dollar you squirrelled away for your kid’s university tuition?
Well, setting up a Registered Education Savings Plan lets you do exactly that: with an RESP, the first $36,000 you contribute is eligible for the 20% Canada Education Savings Grant (CESG).
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