What is a RRSP?
A Registered Retirement Savings Plan (RRSP) is a government-approved plan through which you save money for your retirement years. Your RRSP investments are tax deductible, within limits, and the income earned is sheltered from taxation until withdrawn from your plan. You can have any number of retirement plans.

What does a RRSP mean to you?
Have you ever thought about the lifestyle you would like to live when you retire? A lot of it will depend on how much money you have set aside. Would you like to travel, buy yourself new things, visit your relatives that live far away, or would you rather live just to pay your basic sundries and possible healthcare costs?

By starting a RRSP early, you’re investing money when you can most afford it - during your peak earning years - to build up a comfortable retirement fund. Not only do you invest some money that would otherwise be paid in taxes, but the earnings of your plan are not taxed until you withdraw them. Since 100% of these earnings can be reinvested and compounded, the growth of your RRSP increases rapidly over the years

What happens at retirement?
The first stage of a RRSP is to accumulate retirement savings. The second is to provide retirement income. Your accumulated savings may be invested in a variety of options to provide a retirement income. Only the retirement income payments are taxed each year as you receive them, thus spreading the taxation of your accumulated savings over your retirement years.

Who is eligible to contribute to a RRSP?
Anyone with earned income subject to Canadian taxation, including non-residents, may contribute to a RRSP. You can make part or all of any contribution to a plan in your spouse’s name; you, as the contributor, are still entitled to the tax deduction. Contributions can be made until the end of the year in which the planholder’s 71st birthday occurs.

What is earned income?
Your RRSP deduction is based on your prior year’s earned income. The following qualify as earned income:

• salary, wages, bonuses and taxable fringe benefits (minus union or professional dues and employment expenses claimed as deductions)
  
• taxable wage loss replacement or long-term disability income resulting from employment
  
• Canada Pension Plan disability benefits (only)
  
• net income from self-employment (minus current year business losses)
  
• net rental income from real estate (minus current year rental losses)
  
• taxable alimony or maintenance payments received
  
• royalties of an author or inventor
  
• net research grants

  NOTE:
  1. Earned income must be reduced by deductible alimony or maintenance payments.
  2. Interest, dividend and capital gains income, and U.I. benefits, do not qualify as earned income.
  3. Income that is not taxed, such as Workers’ Compensation and welfare benefits, cannot be used as earned income.

What are the RRSP deduction limits?
Your Notice of Assessment from Revenue Canada, received after filing your tax return, will state your RRSP deduction limit for the following year. Any time after receiving this Notice, you can also phone the Revenue Canada TIPS line 1-8002676999 to confirm your deduction limit.

The greater the future benefits provided by your pension plan, the less you will be able to deduct as a RRSP contribution. This is to create equality in the tax-sheltered retirement benefits available to all taxpayers, regardless of their type of pension plan, whether they are self-employed, or employed but have no pension plan.

Does it pay to borrow?
Investing in a larger RRSP contribution through a loan can reduce or eliminate your tax bill and contribute substantially to your retirement savings.

* These rates are for illustrative purposes only, assuming terms of 10 years and rates per annum.
 
We offer a Take Ten Loan to help you “catch-up” on un-used RRSP contributions.