We should all be thinking about our future. Planning ahead means investing in an RRSP to help reduce our taxes.
The Registered Retirement Saving Plan is a retirement account that was set up by the Canadian government in 1957 to help Canadians save for retirement.
Basically, the account is a tax-deferred program. This allows Canadians to defer paying taxes to the CRA on deposits made. RRSPs are a great strategy to reduces your taxes now while saving for the future.
Prematurely withdrawing from your registered account before retirement will trigger a penalty. However, there are some exceptions to this rule including the Home Buyer’s Plan (HPB) and The Lifelong Learning Plan (LLP).
The Registered Retirement Savings Plan deduction limit is the maximum sum that Canada allows us (taxpayers) to deduct from our income when calculating tax liability. This maximum is set each year by the CRA and can be found on your T1028.
The deadline for a contribution is always 60 days after the end of the previous year to be eligible for a deduction. Always check with your financial institutions about how they are able to accommodate deadlines.
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