The New Year is fast approaching, which means your local gym will be filled to capacity, chocolate sales will decline and the beginning of a new RRSP season will be upon us.
The deadline for RRSP contributions (for the 2015 tax year) is February 29, 2016. Essentially 60 days into the New Year. You are allowed to contribute 18% of your income from the previous year, up to a maximum of $24,930 this year.
If you want to determine your tax return based on your RRSP contribution, here is how:
- Determine your marginal tax rate based on your income and province of residence.
- Multiply your total contribution for the year by your marginal tax rate. This will give you your approximate RRSP tax refund
Or you could forget the math and find one of the many RRSP calculators that are available online. Simply plug in your income and see a quick calculation of what you are allowed to contribute this year.
The point is, now is the time to start contributing to your RRSP’s, the market usually spikes around the deadline because of the high demand of last minute contributors. This New Year and new RRSP season promises to be interesting with the recent fall of oil and other markets. Long-term investors can realize significant gains by buying in during the downturn and recapitalizing during periods of growth.
RRSP’s (Registered Retirement Savings Plans) are an excellent strategy for both short and long-term growth. You get short term benefit in the form of a tax refund all while your money is hopefully growing within an investment. Choosing the right investment can be challenging, especially with the many options available to you.
We recommend the services of an experienced consultant to choose the best RRSP option for you and your family.
From the entire DENT team, we wish you and your family a happy and prosperous New Year!
The information in this material is derived from various sources. Material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please contact us for benefit, pension and insurance advice based on your corporate or personal circumstances.