Tax Tip - How to make the most effective use of your RRSP.

1. If you make regular contributions to an RRSP, consider applying to have your income tax withholdings reduced on your paycheque, which will improve your monthly cash flow. To do this, simply submit Form 1213 to the Canada Revenue Agency for authorization. Once authorized, your employer will be able to reduce the amount of taxes withheld from your pay.
2. Even though your RRSP administration fee is not tax deductible, you should consider paying it directly, instead of from inside your RRSP – this helps maintain capital in your plan, allowing it to grow on a tax-deferred basis.
3. You don’t need to deduct your contribution in the year it is made, If you are expecting to be in a higher tax bracket in the future, consider delaying your deduction until that time – you will receive a larger tax saving if the deduction is taken when you’re in a higher tax bracket.
4. Considering filing tax returns for children or other low-income earners to creat contribution room that can be used in the future.

For more tax tips, visit our website at www.GrantThornton.ca or contact Gary Schlenker at our Kelowna office at the addresses below.

Grant Thornton

Telephone: 250-712-6892

E-mail: gschlenker@GrantThornton.ca