I make around 2x more than my wife and have been contributing regularly to my RRSP's.
At what point should I consider spousal RRSP instead of depositing to my own account?
I will have a higher pension than her when we retire, so would it be more beneficial to do spousal RRSP's now?

Each year where you don't contribute, you are literally giving money to the government.

Each year that you missed, you cannot get back that year's tax paid, even if you decide to contribute to the maximum several years later.

Isn't that how it works?

No, not really.

Either way, taxes will be paid to the government.
Say this year you make 50K. Well, you pay taxes on that $50K at whatever this year's tax rates are.
Say you put in $5K of RRSPs, then you will be taxed on $45K.

Say you quit your job for a year and have 0 income that tax year. You withdraw $40K from RRSP's, well you will be taxed on $40K.


So say you are at the lowest tax bracket. Don't buy RRSP's and save the room for future years where you are making more $$$ and will be taxes at higher tax brackets.


RRSP's is a way to defer taxes, not as a way to get around paying taxes.

There are only 2 guarantees in life. Death and taxes.

Canadian income tax rates for individuals - current and previous years

For 2016, the first tax bracket is 15% on the first $45,282.
The second tax bracket is from $45,282 to $90,563 and is 20.5%
The third bracket is $90,563 to $140,388 and is at 26%.
The fourth bracket is from $140,388 to $200K at 29%
The last bracket is $200K+ and is at 33%.

Say you have $5K of RRSP room this year and you make less than $45,282.
If you save that $5K of room to next year and next year you make $90K.
Well, 90,000-45282=44718 of that income is taxed at 20.5%

So is your $5K of RRSP better spent deferring taxes at 15% or at 20.5%?

Going back to your borrowing money question.
Say you borrow at 2.5% but you are deferring taxes from 15% and may end up paying taxes at 15% in the future, then you are paying 2.5% to the banks.
Worse case scenario. You are laidoff and have to with draw from your RRSP's. Say that year your income is $60K.
Well, the deferred taxes from 15% end up being taxed at 20.5% so you end up giving an extra 5.5% of that portion in the second bracket to the government plus the 2.5% that was changed in interest.

Thought I'd post my question here

I have an RRSP and TFSA that I contribute to biweekly but I also have a high interest savings account, should I just cancel my high interest account since I have a TFSA?

yes unless you really need the cash any time soon. Tfsa remember that you have a contribution and withdraw limit. but a tfsa allows you to put money in much higher return investments all tax free

1. What is the last date that an individual can contribute to an RRSP for the 2015 taxation year?
February 29th, 2016.

2. What is an Individual’s Maximum contribution limit for the 2015 taxation year?
$24,930

3. If an individual wants to withdraw funds in cash from a RRSP what are the withholding tax rates?
Up to $5000 – 10%
Between $5000-$15000 – 20%
More than $15000 – 30%

4. Assuming an individual has money in RRSP’s when can they start withdrawing for retirement income from these savings?
Anytime before 71,

5. What is the differences between a spousal RRSP contribution and non-spousal RRSP contribution?
- A spousal RRSP is where one spouse makes an RRSP contribution but the other spouse owns the plan
- In a spousal RRSP, the higher income spouse will contribute to the plan. The higher income spouse can then claim the tax deduction.

7. How can figure out your RRSP deduction limit for 2015?
Notice of Assessment –

8. If a person wants to over contribute, how much is the lifetime penalty-free RRSP over contribution limit?
If you over contribute, you will be subject to a 1% penalty tax per month

9. What is a homebuyer’s plan?
If you are a first time home buyer, it is possible to withdraw up to $25000 from your RRSP under the Home Buyer's Plan when you buy a qualifying home

10. What is the maximum withdrawal through the home Buyers’ plan?
$25000

11. What is LLLP stand for?
Lifelong Learning Plan

12. Who will qualify for LLLP?
A person who owns an RRSP Plan and Resident of Canada
The student is enrolled or has received an offer to enroll before March of the following year

i have a question about this.
2. What is an Individual’s Maximum contribution limit for the 2015 taxation year?
$24,930

So even if my contribution room is more than $24,930, the max I can put is $24,930?
What if i go over?

IIRC, anything extra over $24,930 can't be used against your income for the year.
But, you can contribute and claim more than that amount if you still have room from previous years.
IE you have $10K of room from 2014 and $10K from 2013, you can buy up to and claim $44930 against your income this year.

if ur on the lower tier of the tax bracket just buy some GICs

If I claim the first time home buyers with my rrsp, can I get a tax dedication the second time I buy rrsp's?

You can still get a tax deductions when buying RRSP's, but you have to make a payment back towards what you borrowed from your RRSP towards the HBP. There is a min payment amount. Whatever that is left over is what they use to calculate your tax deduction.

What is the Home Buyers' Plan?

The example in that link wasn't clear whether the repayments were tax deductible. From what I read they're at least partially deductible.

RRSP repayments are not tax deductable. The government will never allow you to double dip.
If you make a repayment and don't fill out the proper forms, the government will view the repayment as new RRSP purchases, and you will get the tax deductions for it.
But, that portion of RRSP that was used as first time home buyers will go towards your taxable income and you will lose that part of RRSP room, if that makes any sense.

https://turbotax.intuit.ca/tax-resou...buyer-plan.jsp

That's the answer I expected. So without filling out the proper forms and expecting double diping, there could be a chance of over contribution.

I'm suprised to hear that using first time home buyers counts as taxable income though.

When you buy RRSP's, all you are doing is defering that portion of income to be taxed at a later date, and hopefully at a lower tax bracket.
When you take out, max $25K, as a first time home buyer, you have to pay it all back within 15 years.
If you miss a repayment, then they treat it as a withdrawl from RRSP's and you will be taxed on it, just like you would if you needed money and withdrew from your RRSP's.

Sorry, I re-read what I wrote and see what you are confused on.
What I meant by taxable income is, when you withdraw from your RRSP's, that amount is added to your taxable income.
Say you made $40K and needed to withdraw $20K from RRSP's. For that tax year, you will be taxed on $60K.

most legit post in this thread, wp

I remember seeing somewhere that if you make less than $7,9xx a year, you don't get taxed. Did they changed that?

There is a scary amount of misinformation in this thread. RRSPs and TFSAs are powerful tools for minimizing your tax paid over the long run but particularly RRSPs require some strong planning as they are not particularly flexible and can be expensive to withdraw if you need them in an emergency. A financial planner at your bank or financial institution will review your plan and help you understand what you need for free or at a minimal cost and it's worth doing.

Simple things like when you get your first job out of university, it's tempting to start contributing to your RRSP right away to get a tax refund. However, in some fields, you are going to have a huge increase in pay over a few years, and in most of those cases, it makes sense to wait because your marginal tax rates will increase so quickly. Simply put, if you put $20,000 in RRSPs away right out of university, your tax rate might only be 30% so you get $6,000 back while if you wait a few years, it might be 40% and you'd get $8,000 back. Just an example, not actual advice to any one person's situation, but the point is having qualified help is worthwhile.

Mark (works at a bank but is not a financial planner)

Basic personal tax credit is about 10 or 11 thousand, so if you make less than that, then you'll get back all your tax deductions (on the federal side of the tax return, the provincial side has a different amount). The number changes year to year, it was probably 9000 years ago

The TFSA is such a powerful investment vehicle that the federal government had to reduce the limit because of the potential lost revenue.

Generally, if you're young, you want to save using your TFSA. Max out your TFSA each year, and use your RRSP room strategically. If you have a pension, it makes no sense to contribute to an RRSP before your max out your TFSA until you leave your company/organization offering that pension.