SOURCE: Chartered Professional Accountants of British Columbia

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February 01, 2018 10:30 ET

Keep your money in your RRSP

VANCOUVER, BC--(Marketwired - February 01, 2018) - You have exactly one month left to contribute to your RRSP for the 2017 tax year and March 1, 2018 is the last day for your RRSP contributions. Here are three tips from the Chartered Professional Accountants of British Columbia (CPABC) to help you maximize the benefits of your RRSP:

  1. Tax Savings from an RRSP

If you have an RRSP deduction limit (as shown on your 2016 Notice of Assessment), and you are a B.C. resident, you may be able to realize the following income tax savings from making an RRSP contribution:

 If your taxable income
is
 $11,653 -
$45,916
 $45,917 -
$91,831
 $91,832 -
$142,353
 $142,354+
 A $1,000 RRSP contribution would reduce your 2016 taxes by…  Up to $227  ~$227 to $328  ~$328 to $407  ~ $407 to $477
  1. RRSP as a Tax Deferral Vehicle

Remember, an RRSP is a tax deferral vehicle -- you will be taxed on the funds once you make a withdrawal from your RRSP. That said, would you rather pay $1 of income tax tomorrow or $1 of income tax today? Since you likely will be in a lower tax bracket when you retire, actual tax savings should result if you wait until retirement to withdraw from your RRSP.

  1. Spousal RRSP

A spousal RRSP can help shift future income from a higher income spouse to a lower income spouse. This can provide some tax savings when the receiving spouse withdraws funds from his or her RRSP, RRIF, or annuity. Using a spousal RRSP might also reduce the clawback on Old Age Security payments from the higher income spouse and allow the lower income spouse to claim the pension income tax credit.

Spousal RRSPs provides immediate tax savings, since the higher-income spouse making the contribution gets the tax deduction while the lower-income spouse, rather than the contributor, is taxed on any withdrawals at a future date.

Learn how to maximize your RRSP benefits with CPABC's RRSP and Tax Tips at rrspandtaxtips.com.

NOTE TO JOURNALISTS: CPAs are available for interview. An RRSP infographic is also available by request.

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 document 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) is the training, governing, and regulatory body for more than 35,000 CPA members and almost 6,000 CPA students and candidates. CPABC carries out its primary mission to protect the public by enforcing the highest professional and ethical standards and contributing to the advancement of public policy. CPAs are recognized internationally for bringing superior financial expertise, strategic thinking, business insight, and leadership to organizations.

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