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02-04-2013, 08:55 PM
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#1 | What hasn't Killed me, has made me more tolerant of RS!
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| RRSP Question: Haven't worked for the past year, $0 RRSP What is my contribution?
Like title says, what is my maximum contribution?
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02-04-2013, 09:23 PM
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#2 | My homepage has been set to RS
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Check the bottom of your notice of assessement that the CRA sends to you. It will have the exact amount there.
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02-05-2013, 06:02 AM
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#3 | What hasn't Killed me, has made me more tolerant of RS!
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What if I don't have that anymore? Should I just go with no contribution to make sure I don't get penalized? Or is 1% a safe bet?
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02-05-2013, 07:00 AM
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#4 | SiRVs up, dude
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why would you make any contribution at all if you don't need the tax deduction benefits of it...?
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02-05-2013, 01:28 PM
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#5 | My homepage has been set to RS
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| Quote:
Originally Posted by SiRV why would you make any contribution at all if you don't need the tax deduction benefits of it...? | You can make a contribution so you can get a refund from the government.
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02-05-2013, 01:29 PM
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#6 | My homepage has been set to RS
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| Quote:
Originally Posted by dual What if I don't have that anymore? Should I just go with no contribution to make sure I don't get penalized? Or is 1% a safe bet? | If my memory serves me correctly, you can access your previous NOA's on the CRA site. You will need your SIN number and other personal details.
18% of your line 101 is your years contribution limit.
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02-05-2013, 04:39 PM
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#7 | I contribute to threads in the offtopic forum
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if you have room in your TFSA, max that first
RRSPs are not that great - yes money today, but between today and when you cash out and pay tax on it all again, you will turn preferably treated income into non preferably treated income. you also lose ability to use that money, unless you want to get taxed on it.
the ONLY money that goes into my RRSP is money directly put in by my company, which almost maxes me out - but its free money to me, so w/e... if and when that goes away, i will not be putting any money in my RRSP's unless i were to get married/have kids - great way to income split then (your spouse would be earning $0, effectively, so it will come out effectively tax free - HUGE PLUS)
bottom line, RRSPs are to be used sparingly
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02-05-2013, 06:03 PM
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#8 | RS.net, where our google ads make absolutely no sense!
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your contribution for 2012 will be based on 2011 income and made in 2013.
So it depends what your income was in 2011. Not 2012 (that's what I assume when you said past year)
And yes its 18% of that income or 23k whichever is lower.
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02-05-2013, 07:08 PM
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#9 | My homepage has been set to RS
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| Quote:
Originally Posted by 4444 if you have room in your TFSA, max that first
RRSPs are not that great - yes money today, but between today and when you cash out and pay tax on it all again, you will turn preferably treated income into non preferably treated income. you also lose ability to use that money, unless you want to get taxed on it.
the ONLY money that goes into my RRSP is money directly put in by my company, which almost maxes me out - but its free money to me, so w/e... if and when that goes away, i will not be putting any money in my RRSP's unless i were to get married/have kids - great way to income split then (your spouse would be earning $0, effectively, so it will come out effectively tax free - HUGE PLUS)
bottom line, RRSPs are to be used sparingly | Don't forget that you can withdraw a portion for your RRSP's for your first time home buyers program for your downpayment for your first time home purchase. Just has to sit there for 90 days and you can take it out with out any penalties or taxes and you have 15 years to pay that back. Great advantage if you want to save money for your home, cause homes ain't cheap these days.
TFSA's have their advantages too as mentioned by 4444,
It just doesn't offer tax deduction and have a life time limit of $25500, but it's a great place to invest too.
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02-05-2013, 07:15 PM
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#10 | I contribute to threads in the offtopic forum
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| Quote:
Originally Posted by 09k20 Don't forget that you can withdraw a portion for your RRSP's for your first time home buyers program for your downpayment for your first time home purchase. Just has to sit there for 90 days and you can take it out with out any penalties or taxes and you have 15 years to pay that back. Great advantage if you want to save money for your home, cause homes ain't cheap these days.
TFSA's have their advantages too as mentioned by 4444,
It just doesn't offer tax deduction and have a life time limit of $25500, but it's a great place to invest too. | yes, first time homebuyers benefit is huge - i have more than $25K (or whatever the limit is) so i don't think about it anymore... i will use mine when teh time comes
as for TFSA, right now its $25,500 limit, growing at $5,500 a year
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02-05-2013, 09:46 PM
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#11 | What hasn't Killed me, has made me more tolerant of RS!
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Ok so I found my deduction limit. Can I apply for TFSA if my company doesn't offer it?
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02-06-2013, 02:18 AM
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#12 | My homepage has been set to RS
Join Date: Nov 2002 Location: Burnaby
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Originally Posted by dual Ok so I found my deduction limit. Can I apply for TFSA if my company doesn't offer it? | Yup, go into any bank and you can open a TFSA investment account.
I have a self directed trading TFSA account and I purchased mutual funds and stocks for my portfolio.
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02-06-2013, 07:58 AM
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#13 | RS has made me the bitter person i am today!
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| Quote:
Originally Posted by 4444 if you have room in your TFSA, max that first
RRSPs are not that great - yes money today, but between today and when you cash out and pay tax on it all again, you will turn preferably treated income into non preferably treated income. you also lose ability to use that money, unless you want to get taxed on it.
bottom line, RRSPs are to be used sparingly | Your financial situation dictates how much or how little RRSPs should be used.
If someone was in the max tax bracket and could max out their RRSPs, then they could leverage with the government's money to fill up their TSFA.
- Fixed income into the RRSP
- Dividend paying stocks into the TSFA
- Non-dividend paying stocks into a plain investment account
Putting dividend stocks into the TSFA reduces your tax exposure when holding american stocks while increasing your contribution room if you have to remove.
Stocks in plain investment account because you don't pay taxes until you sell and then it's only capital gains @ 50%.
First time homebuyer's thing isn't that great either depending on where you think housing will go. With interest rates the way they are, why wouldn't you borrow from the banks @ 3% and leave your RRSP contributions alone where they would make 7% (or whatever number)?
If you think housing will go up, then perfect.. you're using the bank's money to leverage.
If you think housing will go down, then why would you buy?
Point is, it's not that simple. You have to figure your financial situation out and do the math.
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02-06-2013, 06:16 PM
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#14 | I contribute to threads in the offtopic forum
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| Quote:
Originally Posted by DaFonz Your financial situation dictates how much or how little RRSPs should be used.
If someone was in the max tax bracket and could max out their RRSPs, then they could leverage with the government's money to fill up their TSFA.
- Fixed income into the RRSP
- Dividend paying stocks into the TSFA
- Non-dividend paying stocks into a plain investment account
Putting dividend stocks into the TSFA reduces your tax exposure when holding american stocks while increasing your contribution room if you have to remove.
Stocks in plain investment account because you don't pay taxes until you sell and then it's only capital gains @ 50%.
First time homebuyer's thing isn't that great either depending on where you think housing will go. With interest rates the way they are, why wouldn't you borrow from the banks @ 3% and leave your RRSP contributions alone where they would make 7% (or whatever number)?
If you think housing will go up, then perfect.. you're using the bank's money to leverage.
If you think housing will go down, then why would you buy?
Point is, it's not that simple. You have to figure your financial situation out and do the math. | There's just too much I could say here
Why would u want dividends in tfsa? Why fixed income in rrsp? It all depends on ur mix,
Fixed income should not be in ur taxable account (fully taxable), dividends from cdn stocks are treated preferentially, so depends on where u have room, nothing wrong with paying tax on these if tfsa is full.
US dividends need to be in rrsp, as registered, so no withholding. Tfsa is not registered.
Again, way more to this discussion, but just know, I'm in high, high tax bracket, and I don't use my own money to supplement rrsp - I don't want to pay tax later on, and when I retire, I will be earning high income, so the benefit is lost on me
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02-06-2013, 07:34 PM
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#15 | SiRVs up, dude
Join Date: Jan 2004 Location: Outerspace
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Wait what?
I thought both TFSA AND RRSP's are REGISTERED. The only thing that IS worth holding in a non-registered account should be Canadian Dividend paying stocks only due to the preferential tax treatment. No? All other types of income (i.e. interest income, bonds, GICs international/US funds) should go into registered accounts (RRSP+TFSA)
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02-06-2013, 07:40 PM
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#16 | I contribute to threads in the offtopic forum
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Originally Posted by SiRV Wait what?
I thought both TFSA AND RRSP's are REGISTERED. The only thing that IS worth holding in a non-registered account should be Canadian Dividend paying stocks only due to the preferential tax treatment. No? All other types of income (i.e. interest income, bonds, GICs international/US funds) should go into registered accounts (RRSP+TFSA) | Cap gains are taxed preferably too, half marginal rate
Tfsa is not registered for purposes of no withholding from US taxation, but is tax free, as the name suggests
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02-06-2013, 07:58 PM
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#17 | SiRVs up, dude
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Can you explain 'no withholding from US taxation'? I'm not too clear on what that is
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02-06-2013, 08:52 PM
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#18 | RS has made me the bitter person i am today!
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| Quote:
Originally Posted by 4444 There's just too much I could say here
Why would u want dividends in tfsa? Why fixed income in rrsp? It all depends on ur mix,
Fixed income should not be in ur taxable account (fully taxable), dividends from cdn stocks are treated preferentially, so depends on where u have room, nothing wrong with paying tax on these if tfsa is full.
US dividends need to be in rrsp, as registered, so no withholding. Tfsa is not registered.
Again, way more to this discussion, but just know, I'm in high, high tax bracket, and I don't use my own money to supplement rrsp - I don't want to pay tax later on, and when I retire, I will be earning high income, so the benefit is lost on me | Interest is taxed at your marginal rate. It makes sense to defer the taxes until you need to withdraw or to put into a TSFA. Assuming (for simplicity), a 50-50 allocation between fixed income and stocks (simple cap gains), you gain the most benefit from putting the fixed income in a tax shelter and holding the stocks in the non-registered account.
Sorry my bad on the TSFA and US taxes. I'd still hold canadian dividend stocks in the TSFA though because why pay taxes when you don't need to?
As I said though, it's not cut and dry and depends on your asset allocation and how much you have in assets and your contribution room.
SiRV: If you hold a US stock that pays dividends, the US tax man takes a witholding tax. If you put it into an RRSP, you get it back.
For Canadian dividends generally, TSFA > normal account (because of canadian tax credit) > RRSP (you're taxed at marginal rates when you withdraw)
For US dividends generally, RRSP > TSFA > normal amount
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02-06-2013, 10:23 PM
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#19 | SiRVs up, dude
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I'm also holding Canadian(ZRE) and American (VNQ) REITs. I was never too sure where to put them in my portfolio, but currently they are both sitting in my TFSA. Would you recommend I re-allocate the American REIT into my RRSP instead to maximize the returns?
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02-07-2013, 04:36 PM
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#20 | I contribute to threads in the offtopic forum
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Originally Posted by SiRV I'm also holding Canadian(ZRE) and American (VNQ) REITs. I was never too sure where to put them in my portfolio, but currently they are both sitting in my TFSA. Would you recommend I re-allocate the American REIT into my RRSP instead to maximize the returns? | the US ETF, when it pays a dividend to your TFSA, will withhold 15% tax.
as your TFSA is non taxable, you cannot claim a foreign tax credit - so you lose big time with this current situation
either RRSP or marginal account (assuming you can max out your TFSA with something else, for the latter recommendation)
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