It’s February and we’re in Canada, which means two things. One, it’s really, really cold. And two, you’ve got less than a month to make contributions to your RRSP that will count for tax year 2016.
This year, the actual deadline to contribute is Wednesday, March 1, 2017.
There are lots of good reasons to invest in an RRSP, some of which you may know already:
1) Enjoying the tax-free growth of your retirement savings (until you withdraw the funds).
2) If you have a spouse, contributing to a spousal RRSP in the name of the lower-income-earner can also offer tax advantages in retirement.
3) First-time home buyers can use a portion of their RRSP to help finance their purchase.
Generally speaking, you are able to contribute 18% of your 2015 earned income to your RRSP. But there’s a bit more to it than that; determining exactly how much you can contribute can sometimes get complicated. A lot depends on what’s happened already. For example, how much room you have saved up from previous years, or whether you contributed to a pension plan the year before.
To make things simple, refer to your most recent Notice of Assessment (received after you filed your last tax return). Or do a Google search for “CRA My Account For Individuals,” which is administered by the Canada Revenue Agency. Both of those tools will show you exactly how much you can contribute to your RRSP this year – right down to the dollar!
So if you’re ready to top up your contributions for 2016, feel free to give me a call. I’ll be happy to walk you through the investment options available, and to discuss which ones might make the most sense for you.