Posted on: 10-05-07 10:50:54
A friend of mine told me how he did for RRSP. I would like CDs to comment on this scenario:
"If u want to contribute maxim allowable (or maximise) to your RRSP, borrow money from the bank just before putting money for RRSP. Once u get the refund from CRA pay the bank back with the interest (which will be very small since the time elapsed is less). This way u have enough in your RRSP chest, money for retirement, borrow money for home, etc."
My qn, is this doable? Say if one borrows $6k from the bank, gets around $3k and pays off the loan, still they have to the rest $3k. On the other side, the RRSP is strong enough.
DIO
Quote:
Originally posted by desi in ottawa
A friend of mine told me how he did for RRSP. I would like CDs to comment on this scenario:
"If u want to contribute maxim allowable (or maximise) to your RRSP, borrow money from the bank just before putting money for RRSP. Once u get the refund from CRA pay the bank back with the interest (which will be very small since the time elapsed is less). This way u have enough in your RRSP chest, money for retirement, borrow money for home, etc."
My qn, is this doable? Say if one borrows $6k from the bank, gets around $3k and pays off the loan, still they have to the rest $3k. On the other side, the RRSP is strong enough.
DIO
Yes, this is also one of the strategies to increase your net worth by using OPM.
Most of the bank's and other lending institution give you cheap RRSP loans to contribute towards your RRSP. Its a win-win situation for you as well as the lender. The lender earns the interest and most likely also keep your RRSP account as well and you get the tax refund which you would not have gotten if you had not contributed towards your RRSP.
We encourage and advise our clients and help them in getting RRSP loans which help them contribute towards their RRSP which not only get them tax refunds but their money in RRSP also grows 'tax deferred'. Of course, they are still liable to pay the RRSP loan but part of the loan is paid off by the tax refund and the rest in easy installments stretched over a couple of years.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
I have always done that. Anytime, if I donot have enough money to invest in RRSP, I have taken a loan from Bank, invested in RRSP and taken the tax deduction. In my opinion you can never go wrong with that strategy. The advantages are:
You pay less tax.
You save for the retirement.
Now if your loan is 6k and tax refund is 3k, you have to pay off the rest 3k. It depends on your tax rate. If you are in say 40 % tax bracket. You will only get 40 % as refund in taxes and rest 60 % has to come out of your savings.
Hello Pramod,
I like to pick your brain on the GST issue I am currently dealing with.
My Mat Leave got finished sometime in June 06. I started a business from home (no prize for guessing why :-) I applied for GST and last week the GST number.
Is there any way I can use the same number to pay my 2006 dues?
Quote:
Originally posted by frasers
Hello Pramod,
I like to pick your brain on the GST issue I am currently dealing with.
My Mat Leave got finished sometime in June 06. I started a business from home (no prize for guessing why :-) I applied for GST and last week the GST number.
Is there any way I can use the same number to pay my 2006 dues?
Hi Frasers,
I wish I could help you in this matter but as I do not deal in business taxes and or GST returns, I would not be the right person to answer your question. However, there are some learned tax experts on this forum who will definitely help you out with the right solution.
Good Luck.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Thanks Pramod. I am new to this forum and is browsing all posts. Have been reading quite a lot from you. You seem to be an asset to this site. Great Job!
Quote:
Originally posted by frasers
Hello Pramod,
I like to pick your brain on the GST issue I am currently dealing with.
My Mat Leave got finished sometime in June 06. I started a business from home (no prize for guessing why :-) I applied for GST and last week the GST number.
Is there any way I can use the same number to pay my 2006 dues?
Which 2006 dues you are talking about? You mean 2006 GST dues. It seems that you were not registered for GST in 2006, if this was the case then there were no GST dues in 2006 provided you did not collect any GST on sale/service. Turnover upto $30000.00 is exempt to be registered for GST. However, a business may choose to register. Mind it that ifa business was not registered for GST but collected GST then it is obliged to pay it to CRA.
For more information or to discuss any specific issue you can send me a PM/email or call me at 416-305-0080.
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