The Registered Retirement Savings Plan (RRSP) stands out as a dual-purpose financial tool for Canadians – aiding in retirement savings while offering immediate tax relief. Your contributions to an RRSP reduce your taxable income, providing notable tax benefits in the present.
– Tax Deduction: Contributions to your RRSP are tax-deductible, effectively lowering your taxable income for the year.
– Contribution Limit: For 2023, you can contribute the lesser of $30,780 or 18% of your previous year’s income.
– Deadline: The deadline for 2023 contributions is February 29, 2024, essential for those planning to claim deductions for this tax year.
If you haven’t maxed out your RRSP contributions in the past; unused room carries forward. However, consider your overall financial situation when planning contributions, especially if you have high-interest debts.
First-time homebuyers can leverage the Home Buyers’ Plan, withdrawing up to $35,000 from their RRSP for a down payment, tax-free.
