While many Canadians receive a chunky refund each year,
in most cases, that just means they've been paying too much tax all year
After all, it makes more sense to have $100 extra each
month in your pocket, rather than a refund check of $1200 when your taxes
are processed the following June. Why give the government an interest-free
The most common deduction is a regular contribution
to an RRSP but it can also apply for tax-deductible alimony, childcare
expenses or a number of other deductions or credits.
The request form must be completed each year, and approved
by your local taxation office. If approved, CCRA will send a letter to
your employer, approving the tax reduction on your payroll.
For investors in a group RRSP, the employer's payroll department will handle the RRSP contribution and tax reductions. If you don't contribute through payroll deductions, they need to make a request through their nearest taxation office.
It's never too early or too late to start your RSP
It's always a good idea to think about making your RSP contribution now to avoid the last-minute rush each January and February. What's more, your savings start working faster. Imagine, if you invested 12 months in advance, what a full years worth of investment income/gains added to your retirement plan would mean. For example, $5,000 contributed at the beginning of each year for 20 years, and earning 8% would grow into $247,115. Using the same criteria but contributing at the end of the year would only yield $228,810.
As part of your RSP planning, why not consider
making year round instead of lump-sum contributions. A Fiscal
Agents Advisor can show you how $50 per month can add to the bottom
line at retirement. It's another part of Fiscal Agents Cornerstone Planning.
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