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What is a RRSP?
RRSP stands for Registered Retirement Savings Plan. An RRSP is a tax-deferred savings plan that is "registered" with the federal government. Income earned within the plan is not taxed until withdrawn at retirement or earlier. Also, contributions to your RRSP can be deducted (up to your RRSP contribution limit) on your tax return.
An RRSP allows you to defer paying taxes on retirement savings during your prime income earning years. Upon retirement, you draw on your RRSP when you are presumably in a lower tax bracket.
RRSP Benefits: Why invest in an RRSP?
Making an RRSP contribution helps you reduce the taxes you pay each year.
You can use your RRSP contribution slips in your tax filing with the Canada Revenue Agency (CRA). Your contributions help reduce your gross income, which reduces the amount of taxes you owe.
Investments made inside an RRSP grow faster since they benefit from compounding without the impact of taxation — that's a powerful advantage.
- RRSP Contribution Limits
The amount of RRSP contributions that can be deducted for 2007 is based on your 2007 deduction limit, which will appear on your latest Notice of Assessment or Notice of Reassessment from CRA as there may be carry forward from previous years.
- RRSP Contribution Deadlines
To be tax deductible for the current year, RRSP contributions must be made in the taxation year or within 60 days after the end of the year. If the 60th day falls on a weekend, the next business day becomes the deadline.
The RRSP contribution deadline for any contributions you plan to deduct on your 2007 tax return is March 1, 2008.
Don't wait until the last minute!
RRSP contributions can be made any time throughout the year either in a lump sum or through Pre-Authorized RRSP Contributions.