Chartered Professional Accountants of British Columbia: Gift yourself the gift of saving

VANCOUVER, BC --(Marketwired - December 16, 2016) - With the holiday season in full swing, it is a good time to remember that a penny saved is a penny earned. Before splurging on those extra holiday treats, consider making a contribution to your RRSP and give yourself the gift of a secure future.

Here are five reminders from the Chartered Professional Accountants of British Columbia (CPABC) if you are thinking about making a RRSP contribution:

1. Eligibility for RRSP Contribution
   If your "earned income" in a prior year is subject to Canadian taxation, you have until December 31 of the year you turn 71 to contribute to an RRSP.

2. Tax Savings from an RRSP
   If you have an RRSP deduction limit as shown on your 2015 Notice of Assessment and you are a B.C. resident, you could realize some income tax savings from making an RRSP contribution. The RRSP contribution deadline for the 2016 tax year is March 1, 2017. Look into the amount you can save with an RRSP contribution today.

3. Early Contribution to an RRSP
   RRSPs can be tax-effective investment vehicles, especially if you are many years from retirement. If you do decide to take advantage of an RRSP, it is advisable to contribute at the beginning of the year to start the tax-free compounding of earnings within the RRSP earlier.

4. RRSP as a Tax Deferral Vehicle
   Remember, an RRSP is a tax deferral vehicle -- you will be taxed on the funds when withdrawn. That said, you would rather pay $1 of income tax tomorrow than $1 of income tax today. Actual tax savings will result if you are in a lower tax bracket when you withdraw your funds.

5. Tax Deduction from an RRSP
   You can make an RRSP contribution in a year and not claim a tax deduction in that year if you think your marginal tax rate will be higher later. As long as your undeducted RRSP contributions do not exceed your RRSP deduction limit plus $2,000, they can be carried forward indefinitely for deduction in future years, without penalty. This could be a substantial advantage if you claim the tax deduction in a year or years when you are in a higher tax bracket.

Learn how to save more with CPABC's RRSP Tips and look out for CPABC's Tax Tips for the 2016 tax year coming this January at www.rrspandtaxtips.com.

NOTE TO JOURNALISTS:

Please credit Chartered Professional Accountants of British Columbia (CPABC) for use of the content and include the following disclaimer: Tax rules relating to these RRSP tips are complex. This is not intended as tax advice and you should not make tax decisions based solely on the information presented in these tips. You should seek the advice of a chartered professional accountant before implementing a tax plan or taking a tax filing position.

About CPA British Columbia

The Chartered Professional Accountants of British Columbia (CPABC) was formed through the amalgamation of the Institute of Chartered Accountants of BC (ICABC), the Certified General Accountants Association of BC (CGA-BC), and the Certified Management Accountants Society of BC (CMABC). CPABC was officially established when the CPA Act came into effect on June 24, 2015. CPABC represents over 34,000 members and 5,200 CPA students and candidates.

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