Registered Retirement Savings Plans

This method of tax deferral is one of the most significant tax planning ideas available to Canadian taxpayers. By making contributions to a plan not later than 60 days after the current year-end a deduction from income can be taken in the current year for the amount within certain limitations. An immediate tax saving results and the tax refund can be reinvested or used currently for personal purposes.

Spousal Plans

Deductible contributions may also be made to a registered retirement savings plan for the benefit of a spouse or common-law partner. If the spouse or common-law partner will have lower income at the time the funds are withdrawn and, therefore, be in a lower tax rate bracket, it may be more advantageous to contribute funds to a spousal RRSP. In addition, annuity payments received from spousal RRSP will be qualifying income for the spouse's or common-law partners $1,000 pension income deduction.

"Catch-Up" Contributions

If an individual hasn't "maxed out" on RRSP contributions, he or she is entitled to make an additional contribution over and above the normal limit for the year. From 1991 onward, "unused" RRSP contribution limits can be carried forward indefinitely to future years.

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