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Big Tax Refund

Peter Katevatis - Feb 06, 2018
There is often a debate over whether a Registered Retirement Savings Plan (RRSP) is a better “deal” than a Tax Free Savings Account (TFSA) but let’s put an end to that today.  For retirement purposes it’s not even close… RRSP wins all comparisons!

There is often a debate over whether a Registered Retirement Savings Plan (RRSP) is a better “deal” than a Tax Free Savings Account (TFSA) but let’s put an end to that today.  For retirement purposes it’s not even close… RRSP wins all comparisons!

 

Katevatis Wealth Management RRSP 2018

 

The key to that last sentence is “for retirement purposes” as the TFSA has wonderful advantages for short term capital and is a key part to most investment portfolios.  The TFSA has the compounding tax free growth benefits of the RRSP, but fails over the long term.  The tax deferral of the RRSP allows you to push out your income tax payable to a very far distant future and that is always a good option.  Having more money invested early will allow more funds to compound tax free for the future.

 

You can make your RRSP contribution in many ways:

  • Contribute excess cash from your savings account
  • Contribute assets (stocks, bonds, funds, etc) from your cash/margin account
  • Get an RRSP loan

 

If you feel you might be faced with a tax bill on April 30, 2018 you have a couple weeks to figure out your best option.  The RRSP deadline for contributions to be made against 2017 income is Thursday, March 1st, 2018.  I HIGHLY recommend completing your contribution before that date so you are not disappointed.

 

The maximum allowable contribution is 18% of your last year’s income to a maximum of $26,010 but your limit is probably much higher.  Any excess RRSP room is carried over so it is not unusual for individuals to have RRSP contribution room over $100k.  The best place to look for your RRSP contribution limit is your 2017 Notice of Assessment or online at the CRA Website

 

Clients always wrestle with the decision on how to invest the funds inside the registered accounts.  Since all gains are sheltered it would be nice to put the BIG winners in there.  Shares that can move 50% or more in one year are wonderful when those gains are positive, but heart-wrenching when those investments become tax free losses.  The right answer for you might not be same as anyone else so it is crucial that your investments meet your goals.  Take the time to figure out what you are investing FOR and then you can decide HOW to invest, we call this Goals Based Investing.

 

The team at Katevatis Wealth Management draws on all of the tools provided by Canaccord Genuity Corp to offer solutions that are unique to each individual.  If you want a special service that encapsulates your needs to provide a solution to your goals, don’t hesitate to reach out.