FINBIZ INVESTMENTS INC.
10220 DERRY RD UNIT# 204, MILTON, ON L9T 7J3
CONTACT: 647-781-1238  |  finbizinvestments@gmail.com |​ finbizinvestments.com

Your RRSP contribution limit for 2019 is 18% of earned income you reported on your tax return in the previous year, up to a maximum of $26,500. For 2018, the upper limit was $26,230.

RRSP (REGISTERED RETIREMENT SAVINGS PLANS)


A registered retirement savings plan (RRSP) is a savings program that is overseen by the federal government. Initial RRSP contributions entitle investors to a tax deduction. Furthermore, amounts accumulated in an RRSP can continue to grow in a tax-sheltered savings vehicle and is usually used to finance one’s retirement. The amount investors may contribute to their RRSP depends on how much income they earned in the previous year. Finally, taxes are payable on RRSPs during the year in which they are used.

A registered retirement savings plan, or RRSP, is a savings plan for individuals which allows them to defer tax on money to be used for retirement. You can contribute up to 18% of your previous year’s income—-different for every year.

What is the maximum age to contribute to RRSPs?

Individuals can contribute to their RRSP until December 31 of the year in which they turn 71. However, if the contributor is over 71 and declares an earned income, he may contribute to his spouse’s RRSP if his spouse is 71 years of age or under.

What are the tax benefits of having RRSPs?
Reducing taxable income in higher-earning years
Increasing income in retirement, while decreasing taxable income at the time of contribution
Using spousal plans as a form on income splitting
Earnings inside the RRSP not being taxed as long as the funds are not withdrawn

How is earned income calculated?
Includes income from employment, business and rental property
Excludes interest, dividend income and capital gains
Reduced by losses or other deductible amounts; examples would be losses from a business or rental property and alimony paid.

What are the current contribution limits?
The annual contribution room corresponds to the lowest of the following amounts:
18% of the income earned the previous year... Usually there are different ceilings/brackets for different years.


RRSP could also be used towards:
The Home Buyers’ Plan (HBP):
This plan allows first-time home buyers to withdraw up to $25,000 from their RRSP to put towards a down payment. In  case of a married or common-law couple, the combined tax-free withdrawal amount increases to $50,000, as both can pull $25,000 from their accounts. 

Banks don’t require mortgage insurance for buyers making a 20% down payment. So if borrowing from your RRSP allows you to get over that threshold, you’ll save thousands in mortgage insurance premiums.However, you have to pay the money back in 15 years, starting the second year after the money was withdrawn. You need to report the repayments on your tax return each year—and you don’t get a tax break, because you got a refund when you made the original contribution.

Lifelong Learning Plan (LLP):
If you’re returning to school as an adult, you can also take advantage of the Lifelong Learning Plan, which works in a similar way. The LLP allows you to withdraw up to $20,000 (no more than $10,000 in any year) from your RRSP if either you or your spouse is attending school. You have 10 years to pay it back, and the first repayment isn’t due until the fourth year after the first withdrawal.


What is spousal RRSP?
Individuals can contribute to their spouse’s RRSP and apply the tax deduction as the contributor. The total contributions made during the year (to their own RRSP and to their spouse’s) must not exceed the maximum amount allowed for the contributor. If an amount is withdrawn from the spouse’s RRSP since the last contribution made to one of the spouse’s RRSP contracts (regardless of the institution) before three consecutive dates of December 31 have elapsed, the tax on the withdrawal is charged to the contributor (not to the spouse).