| 1. |
Short on cash? Consider using non-registered stocks and bonds.
Accrued gains will be taxable, but losses are not deductible. |
| 2. |
Still low on funds? Consider borrowing. You can’t deduct
the interest paid on the money you borrow to contribute to an RRSP, but borrowing
to make a contribution can be a wise decision in some cases. |
| 3. |
Playing catch-up? If you’re making a large “catch-up”
contribution that brings your taxable income into a lower tax bracket, think about
spreading your deduction over a couple of years to increase the related tax benefit.
And if 2007 was a low-income year—perhaps you were in school, on maternity
leave or not employed for part of the year—contribute anyway and claim the
deduction next year, when the tax benefit will be greater. |
| 4. |
Paired up? If you have a spouse or common-law partner who
isn’t working or who has a low income, consider contributing to a spousal
RRSP. Even with the new pension income splitting rules there are still benefits. |
| 5. |
Excess contributions? Consider over-contributing to your
RRSP by the permitted $2,000 penalty-free amount. You won’t get a tax deduction
for the extra amount, but your earnings on it will grow tax-free. |
| 6. |
Making other investments? The preferential tax treatment
for capital gains and Canadian dividends doesn’t apply to RRSP investments.
It might make sense to hold interest-bearing investments in your RRSP. |
| 7. |
Naming a beneficiary? Think carefully about who it will be.
Naming your spouse, common-law partner or a dependent child or grandchild as your
RRSP beneficiary could permit RRSP proceeds on your death to be tax-deferred even
longer. Don’t forget that you can also name a charity as your RRSP beneficiary. |
| 8. |
What’s next? Plan ahead. Make your 2008 contribution
now—don’t wait until the start of 2009. You’ll gain another year
of tax-free growth—which, over the life of your RRSP, could amount to a significant
bump in the size of your retirement nest egg. |
