I have made a fair amount of RRSP contributions for 2006 tax year, but my income for the year puts me in the second column on the Federal Schedule 1, i.e the $36,378 to $72,756 range.
The guide says as a tax tip that one could carry forward some of the contributions made to later year, if you feel that you will have a higher income next year.
I will most likely have an income engouth to put me in the 3rd column range on the Federal Schedule 1.
So how does one decide on the amount that one should claim this year and claiming the rest next year ?
I was looking at line 5 of Federal Schedule 1 and was not sure how that rate plays into the tax rate....the calcualations on Canadian tax returns are multi-step and confusing...
Any case I see the rate go from 15.25% to 22%, a jump of 6.75%
The next jump is from 22% to 26%, a jump of 4 %
and finally from 26% to 29%, a jump of 3%
So I figured how should use enough RRSP contribution, from the pool that I made that it will put my taxable income on line 260 of T1, into the 1st column range of Federal Schedule 1, i.e $36,378 or less.
I feel the rate change from this to the next is the highest and the rate change does not increase that much as your taxable income goes higher.
Hope I am making sense so far.
Also, next dilema then is how much do you leave for next year (if you can estimate what your next years taxable income will be) versus using all up in this year.
Location: carl sagan's universe
Posted on: 06-03-07 11:33:50
1.Are you self-employed or employed?
2. Are you willing to apply a melt-down at a later stage?
Those are just 2 of the questions that pop into my mind instantly.
Also there is the provincial tax to take into a/c.
I am self-employed, contribute to RRSPs, besides using other financial techniques to minimize tax and also apply a melt-down.
A bit late to figure things out now for tax deductions of 2006. Maybe you are gearing up for 2007?
I am adding this in case you have already read the post and wonder why I struck out stuff
I understand you have already contributed and wondering whether you should deduct.
Quote:
Originally posted by navin2004
I have made a fair amount of RRSP contributions for 2006 tax year, but my income for the year puts me in the second column on the Federal Schedule 1, i.e the $36,378 to $72,756 range.
The guide says as a tax tip that one could carry forward some of the contributions made to later year, if you feel that you will have a higher income next year.
I will most likely have an income engorge to put me in the 3rd column range on the Federal Schedule 1.
So how does one decide on the amount that one should claim this year and claiming the rest next year ?
I was looking at line 5 of Federal Schedule 1 and was not sure how that rate plays into the tax rate....the calculations on Canadian tax returns are multi-step and confusing...
Any case I see the rate go from 15.25% to 22%, a jump of 6.75%
The next jump is from 22% to 26%, a jump of 4 %
and finally from 26% to 29%, a jump of 3%
So I figured how should use enough RRSP contribution, from the pool that I made that it will put my taxable income on line 260 of T1, into the 1st column range of Federal Schedule 1, i.e $36,378 or less.
I feel the rate change from this to the next is the highest and the rate change does not increase that much as your taxable income goes higher.
Hope I am making sense so far.
Also, next dilemma then is how much do you leave for next year (if you can estimate what your next years taxable income will be) versus using all up in this year.
HI Navin,
The Tax software gives you the option of optimizing the RRSP contribution and lets you know how much you should claim this year and how much you should carry forward for next year. You can also play around by putting various amounts in line 208 and see the change in refund/tax payable amount and see the percentage up or decrease in the refund/tax payable for every dollar you contribute.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Quote:
Originally posted by investpro
1.Are you self-employed or employed?
Employed.
Quote:
2. Are you willing to apply a melt-down at a later stage?
Not sure what you mean by melt-down.
Quote:
Also there is the provincial tax to take into a/c.
I did see that the slabs of the Ontario Schedule 1 are little different and higher, but can't help it...can save in either Federal or Provincial tax.
Quote:
A bit late to figure things out now for tax deductions of 2006. Maybe you are gearing up for 2007?
It's still not late for 2006, if you have already made contribution and that contribution could be carried forward, you could still play around with seeing how much to claim now versus later.
Quote:
I understand you have already contributed and wondering whether you should deduct.
Yes, exactly, that's what I was looking for other's inputs on.
