Following is my family income for 2006 from different source according to T4 and T5.
Me 21226.04 (T4), My wife 7402.10 (T4) and 316.52 (T5). We have a joint bank account. I have bought TTC metro pass for 316.52.
How much (minimum) RRSP I/we should buy to maximize our tax credit?
Quote:
Originally posted by Ghost
Following is my family income for 2006 from different source according to T4 and T5.
Me 21226.04 (T4), My wife 7402.10 (T4) and 316.52 (T5). We have a joint bank account. I have bought TTC metro pass for 316.52.
How much (minimum) RRSP I/we should buy to maximize our tax credit?
Hi Ghost,
It depends on your RRSP contribution room and the amount you wish to invest. However, assuming that you have contribution room then every $1000 RRSP may get you approximately $170 to $200 in refund. Please note that this is only an approximation as there are so many factors which effect your refund. If you are in Toronto, you can contact me with these details and I can help you with RRSP investments and let you know the exact tax refund amount.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
RRSP's for the year 2006 from University of Waterloo. (2007)
For those who want to do a small calculation with the current available salary details for the year 2006, here is a web site that will help you accomplish the same. But do use the tax returns that are available from the CCRA and any other help that is offered here on the website.
http://www.hr.uwaterloo.ca/benefits/pension/rrsp.html
Good Luck.
Freddie.
Location: carl sagan's universe
Posted on: 24-02-07 23:38:19
Hi Ghost,
To maximize your tax credit- you should invest in labor sponsored funds(LSIF)
LSIFs give you a tax credit of upto 35%. So if you invest $1000 you will get a tax credit of upto $350 plus a tax refund from your normal RRSP contribution.
And besides the RRSP deduction limits are based upon the NOA (notice of assessment) of 2006 which is based on your earnings in 2005. Your contribution room right now is the sum of your deduction limits in your NOA plus the contibution allowed based on 2006 earnings.
Going back to your question of maximizing your tax credit one will have to know the deduction limit on yor NOA which you should have got in May 2006 and invest exactly that, $5000 of which should go into an LSIF.
Clear as mud, eh?
No money to invest for the maximum allowable deduction? RRSP loans are readily available for that purpose which you can pay off in comfortable monthly installments.
Ghost:
My advise will be to buy RRSPs but not use it until later years when your income shoots up and your tax bracket is higher enough to make out of RRSP.
Remember, RRSP is not just Retirement plan; it is more than that. I think the name given does not do proper justice to RRSP investment.
But then it depends on your future plans and prospects.
