it is ALWAYS a good thing to purchase RRSPs and TFSA provided you have the means to do so. if you have the contribution room for RRSPs and the funds to do so, it is beneficial to maximize your contributions to simply increase your savings. afterall, that is what the purpose of an RRSP is, for your savings.
You dont need to use the contributions as a deduction on your taxes in that immediate year if you choose not to (for example, if you foresee an increase in income in future years). you should always make contributions when you can, so that you have the option to choose when to use it as a deduction in the future.
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Originally Posted by twdm
So no matter how far you are from the next bracket, you are lowering your average tax rate by reducing the amount of income taxed at your highest bracket.
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true, but it still stands that it is more beneficial for you use your RRSPs as a deduction for every dollar over the first tax bracket first. if i make $45,000 and had $5000 in RRSP contributions, i could simply just use $3000 of my contributions as a deduction so that i can avoid paying tax for the portion of income in the 2nd tax bracket (roughly 42k) of 22%, and then save the other $2000 as an unused contribution amount for future years where i may get a raise and be further in the 2nd tax bracket, instead of using the $2000 now to save 15%