This is the time of year that many Canadians look to top up their Retirement Savings contributions-in large part to create a larger tax deduction, or to reduce potential taxes owing to the government.
This is definitely a very sound and prudent strategy, but it may not be the best course of action in all cases.
Here is a great article to get you thinking about how to best maximize your after tax dollars over the long term.
Be sure to give it a read before you decide what to do with your annual RRSP this year.
Don’t fall into the RRSP ‘tax trap’
As the annual RRSP contribution deadline approaches, it’s worth considering more than just how much money you can afford to stash away. Specifically, it’s worth thinking about taxes.
For many investors in registered retirement savings plans, the tax strategy starts and ends with deducting their annual contributions from their income. But this is a shortsighted approach that will likely lead to much larger tax bills than necessary down the road, financial advisers and tax specialists warn. How can you avoid the RRSP tax trap?
Read more here