We are half way into the first 60 days of the year and it’s time to think about contributing to your RRSP. You have until March 1st, 2017 to reduce your 2016 income and get a higher tax refund.
Making the Most of your RRSPs
- You can claim your RRSP contributions as a deduction on your tax return. For example, if you’re in the top tax bracket in Alberta, every $1,000 you contribute reduces the tax you pay by approximately $480.
- You won’t pay any tax on investment earnings as long as they stay in your RRSP. This tax-free compounding allows your savings to grow faster.
- If you earn more money than your spouse, you can help build their tax-free savings by contributing to a spousal RRSP.
- Additionally, you can withdraw tax-free funds from your RRSP for a down payment on a qualifying home purchase.
The Home Buyers Plan (HBP) is a program that allows Canadians to withdraw up to $25,000 in a calendar year from their RRSPs to buy or build a qualifying home for themselves or for a related person with a disability.
Under this plan, only first-time homebuyers are eligible to participate, unless the special rules for persons with disabilities apply.
* You can be considered eligible for this program “again” if you have not lived in a home that you own. Call if you require more information 403-648-1541.
Each spouse or common-law partner can withdraw up to $25,000 (combined $50,000) under the HBP from any RRSP under which he or she is the annuitant.
This is an excellent opportunity to save for your first down payment. Make sure you make use of it!
Please contact Tim for more information!