dave@lsuc.UUCP (David Sherman) (02/13/85)
With the March 1 deadline approaching, I thought I'd
mention the RRSP tax shelter. Many people think tax
shelters are only for the rich, but believe me, the
RRSP is for just about everyone. (In general, the only
reason you would not want one is if you're in a low bracket
this year and expect to be in higher brackets indefinitely
into the future.)
The workings are simple: you can deduct up to 20% of your
earned income, to a maximum of $5,500 ($3,500 if you're in
a company pension plan or DPSP). If you contribute by March
1, you can deduct for 1984, and get your refund sometime this
spring. The value of the deduction depends of course on your
marginal rate. (For example, on $12,500 of taxable income
your marginal rate is about 30%; on $23,000 it's about 37%.)
All interest accrues in the plan free of tax until you take it
out, which can be anytime. If you're married and planning on taking
off time to have kids sometime in the future, then's the time to
plan to take it out (if you time it right, the husband can get
the deduction and the wife, two years later, the income taxed at a
much lower rate).
Last year's fun and games was R&D tax credits, but those are
gone now (in the quick-flip format). So the RRSP is about the
only easy and risk-free things left. Don't miss out!
David Sherman
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{utzoo pesnta nrcaero utcs}!lsuc!dave
{allegra decvax ihnp4 linus}!utcsrgv!lsuc!davejmsellens@watmath.UUCP (John M Sellens) (02/15/85)
Dave Sherman is right. For the average Canadian, RRSP's, RHOSP's and CSB's (Canada Savings Bonds) are pretty well the best things that you can do with your money (other than paying down your mortgage of course). John Sellens
manis@ubc-cs.UUCP (Vince Manis) (02/18/85)
I absolutely agree on the desirability of RRSPs. They not only provide a good return, but they also act to provide retirement income. In that way, they are a good instrument of social policy, as they encourage people to do retirement planning earlier. I'm less enthusiastic on RHOSPs (I don't have one), because of the manifold limitations such a plan has to have in order to avoid misuse. I want to put in a plug for daily-interest RRSPs. These are basically just savings accounts, with the proviso that they're registered with Revenue Canada. There's no minimum deposit, and no charges, making them ideal for depositing little bits of money on a very regular basis. Mine is with the T-D, and it's even on my Green Card, so I can make a deposit at an ATM. (One has to be careful to avoid overdepositing, though...). The interest is very comparable to that of a regular savings account, but you can transfer money to any other variety of RRSP (such as a term deposit RRSP) at any time.