Hi everyone, please don’t laugh or scoff at my question. Literally financially illiterate and trying to start learning at 37.
I would like to purchase RRSPs.
So stupid question is, if I purchase it now doesn’t it count as purchasing it in 2022? Or because I purchased them before March 1st I can count it towards my 2021 contribution room?
Posted Feb 20, 2022, 1:19 PM UTC
You don't purchase an RRSP. It's an account that you put money in. You can then use that money to purchase other investments within the account like stocks, bonds, or ETFs. Putting money in there will allow you to not pay tax on it.
Between Jan 1st and Feb 28th, contributions made to RRSP can count towards 2021 or 2022. You get to choose when you do your taxes. Either way you have to declare them this year then you'll choose when you want to redeem them.
One does not purchase an RRSP...you contribute.
Hello government I would like to purchase 5 RRSPs please
If you make a deposit to your RRSP between January 1 - February 28 of any given year, you can choose to deduct the contribution from the current year’s income or the previous year’s income.
If OP is just starting out with investments, should we not be advising them to start by working toward maxing out their TFSA first?
I was told if you receive CCB then contribute to you RRSP and what ever refund you get put it in your tfsa. For reference income is $80k spouse $55k and 2 children.
So many people are telling me different things and I’m reading a lot of different things as well. It’s very overwhelming.
I can't for the life of me think why anyone would ever put money into an RRSP without having first maxxed out their TFSA.
Perhaps someone with deeper knowledge will chime in and help out (or confirm my suspicion).
[deleted]
Because lowering your net income by contributing to RRSPs when collecting CCB (even more so with 2+ children) increases the benefit. Also with Covid there were some additional benefits - for example, in 2021 families with a net income of $120k or less received $300 per child under 6. So keeping your family net income low when the kids are young can make sense. As the benefits are reduced when the kids are school age then you can shift to more TFSA contributions.
An additional thought is that using a spousal RRSP during this time might be a good decision to give RRSP from the higher earner to the one who has taken maternity/parental leave or perhaps has reduced their hours while raising children. They can use the RRSP for pension buyback or just as supplemental income later on.
If you need to repay a loan with your after-tax dollars and you are in the top tax bracket, then I think it makes sense to put in RRSP first?
The choice would be incur 53.3% tax and put that into TFSA or defer the tax and let that money grow in your RRSP.
Yes the latter response. CRA gives extra time
RRSP contributions made in the first 60 days are reported on your 2021 return but you don't have to apply them.
OMG soooo much factually wrong information above (except for Dok's point about the TFSA being your better account for savings now). Please rethink your choice of RRSP.
Start from the beginning.
So, a contribution now could be using contribution room that was
(a) available all during 2021, or it could depend on room that was
(b) added at Jan1 2022 based on 2021 wages.
You can only deduct on this 2021 tax return contributions (a).
Contributions (b) cannot be deducted until next year.
So much info for you to read!! Start here:
https://youngandthrifty.ca/how-to-start-investing-online-in-canada/
Yes, purchases done in the first 60 days of the calendar year can be applied to either year.
Thank you