January and February are busy months in our industry! This time of year, investors start thinking about and preparing for the RRSP deadline. In doing so, there are several things to consider.
Remember, we’re always here to answer your questions, offer professional guidance, and assist with that preparation.
The RRSP deadline is March 1
The Canadian Revenue Agency (CRA) gives you a little extra time (60 days into the year) to calculate your earnings and prepare your RRSP contributions accordingly. You have until March 1, 2023, to contribute to your RRSP for the 2022 tax year.
If you miss the deadline, you can roll that RRSP contribution room into next year.
Be strategic to increase tax savings
One of the most significant benefits of an RRSP is its ability to increase tax savings. Those with a higher income will be in a higher tax bracket. Therefore, taking advantage of these tax savings will put a significant amount of money back into your bank account.
How much will your contribution impact your tax owning or tax refund for 2022? Use our RRSP Tax Savings calculator to get an idea. You can also book an appointment with your Fincor Financial Advisor. We’ll help you build a strategy to maximize your tax savings and create a strategic taxation plan for future years.
RRSP “room”
Contributing before the deadline will enable you to optimize your tax savings for 2022 when you file your return this spring. However, if you miss the deadline or choose not to contribute, that remaining contribution room will be available next year. Then, you can use that room for your 2023 tax return.
The CRA allows you to contribute 18% of the income you earned and reported on your tax return the prior year, or $29,210, whichever is less. If your contributions didn’t max out that room, it gets added to the 18% or $29,210 for the following year.
Learn more about how your RRSP deduction limit is determined.
Set up automatic contributions
Setting up automatic contributions to your registered accounts is the easiest way to avoid missing the RRSP deadline. We can help you set up your contributions, so they automatically come out of your bank account. You can choose the amount that comes out and the date of each deposit.
Automatic contributions ensure you don’t miss the deadline, but that’s not the only benefit. Contributing consistently thorough the year, instead of in a larger lump sum at the end of the year, increases the compound growth of your investments.
Fincor is here to help
Have more questions? Read these RRSP Deadline FAQs.
We are always here to help. Book a meeting with your advisor to discuss your RRSP options and create a smart taxation strategy.