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What's New |
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It’s tax time!
Cynthia Wever
Specializing in
personal income tax preparation. Discounts for Money
Concepts clients.
Cynthia can be reached at
613-496-0173
or 613-678-3861
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Our Best GIC Rate as of
February 1, 2010
is
3.60%
(rates subject to change without notice) |
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Visit
our website to find handy
Financial
Calculators
click
here!
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 Your Money
Matters
February
2010 Issue
THE TAX FREE SAVINGS ACCOUNT IS ONE YEAR OLD! HAVE YOU TAKEN
ADVANTAGE OF IT YET?
You
might think that it’s all you can do to maximize your RRSP
contributions every year, Well, it doesn’t have to be one or the
other. Let’s debate the use of TFSA and the RRSP.
Until
2009, most Canadians held their retirement savings in an RRSP, where
they could claim a deduction for their contributions and then defer
tax on withdrawals until retirement. The introduction of the TFSA
has provided another powerful savings vehicle that allows investment
growth to accumulate and be withdrawn at any time tax-free. However,
unlike an RRSP, you cannot claim a tax deduction for the
contributions you make to a TFSA. On the plus side, if you need to
withdraw money from your TFSA, you have an opportunity to replace
that money because all TFSA withdrawals are added back to your
unused contribution room in the following year.
Whether
the best choice is to save in an RRSP or a TFSA depends on your
savings needs, as well as your current and expected future financial
situation and income level. If you are in a low tax bracket, saving
in a TFSA may be more advantageous than saving in an RRSP since TFSA
withdrawals have no impact on federal income-tested benefits and
credits such as child tax benefits, Old Age Security and Guaranteed
Income Supplement. On the other hand, RRSPs may be a better option
if your tax rate at the time you contribute is higher than it will
be when you withdraw your savings. You’ll benefit from a tax
deduction when you make your contribution and withdrawals will be
taxed at your lower future rate. If the reverse is true, a TFSA can
provide better results.
If
you are close to retirement and have a company pension plan plus
RRSPs, it would make sense to maximize your TFSA contributions to
reduce the taxable income you will have in retirement. If you are
just starting out in the workforce and your salary is under $30,000.
You should consider contributing to a TFSA and gradually contribute
to an RRSP as your income increases.
The
best scenario would be to have a mix of the two to increase your
choices of withdrawal options when the time comes. It is very
difficult to predict with accuracy what your income will be five,
ten or more years down the road. Everyone’s situation is unique,
therefore you need to match your investments to your own personal
needs and goals.
For
more information on this subject, or if you would like more
information to decide which one is right for you, please give us a
call .
Theresa Wever and the Money
Concepts Team.
*Interest expenses on money borrowed to
contribute to RRSPs is not deductible for tax purposes.
Borrowing to invest may be appropriate only for investors with
higher risk tolerance. You should be fully aware of the risks and
benefits associated with investment loans since losses as well as
gains may be magnified. The value of your investment will vary and
is not guaranteed, however, you must meet your loan and income tax
obligations and repay your loan in full.
Tax refunds may vary according to your marginal tax rate.
Commissions, trailing commissions, management fee and expenses all
may be associated with mutual fund investments. Please read the
prospectus before investing. Mutual funds are not guaranteed,
their values change frequently and past performance may not be
repeated. |
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Russell Location |
Vankleek Hill
Location |
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1087 Concession Street, P.O. Box
269
Russell ON K4R 1E1
Tel: (613) 445-8624 |
116 Main Street
East, P.O. Box 459
Vankleek Hill, ON K0B 1R0
Tel: (613) 678-3861 |
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Toll-Free:
1-800-250-5557 -
www.moneyconceptsrv.com |
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