Need A Legal Tax Shelter? Contribute To An RRSP

by Guest on November 23, 2010

    • Beat the deadline: The deadline for making a contribution to a Registered Retirement Savings Plan (RRSP) that can be deducted on your 2010 tax return is March 1, 2011.
    • Know your limit: The maximum annual dollar limit for RRSP contributions in 2010 is $22,000.
    • Over the limit rules: Contributions up to $2,000 in excess of RRSP limits can be made without being subject to a penalty tax.

  • Spousal support: A spouse in a higher tax bracket may consider income-splitting opportunities for the future by contributing to a spousal RRSP. However, the contributing spouses are limited to their own personal deduction limits.
  • Contribution room: RRSP contributions can be carried forward if claimants foresee being in a higher tax bracket in future years. This will help maximize the tax deduction.
  • Age restrictions: The age limit for holding RRSPs has changed from 69 to71. If you turn 71 in 2010, you must convert your RRSPs into a form of retirement income before the end of this year or be taxed on the Fair Market Value of the plan. Be sure to discuss your options with a tax professional.
  • RRSP withdrawals: With few exceptions, RRSPs withdrawals are taxed. However, there are federal programs allowing contributors to borrow from their RRSP for putting a down payment on a first house or financing education. The special rules and restrictions should be discussed with a tax professional.

 

 

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{ 2 comments… read them below or add one }

perwez ahmad July 4, 2012 at 9:38 pm

hello there
this is an excelent page lot of information and guidance for common man
keepup the good work it helps lot of people who donot know govt rules and regulations.
i have one quistion to aske that i have rrsp income and i donot have a room for
rrsp can i use my spouse rrsp limit to put in sposal rrsp because she do not have income but have a rrsp limit we are 65 year of age.
thank you in advance

Pam July 4, 2012 at 9:47 pm

You would not be able to use your spouse’s contribution room in order to contribute to a spousal RRSP. When you contribute to a spousal RRSP you use your own contribution room. So, if you do not have any contribution room left for 2012, I would advise you to use a Tax Free Savings Account instead for now.

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