A registered retirement savings plan (RRSP) is a government-approved account that allows Canadians to plan for retirement. It was first introduced in 1957, RRSPs provide a way for individuals to save and invest their money in a tax-efficient manner. RRSPs are a great way to save. They save you money on your taxes today and allow you to efficiently save for your retirement. By starting early and making steady contributions, you’ll build up a nest egg you can rely on when you reach your golden years.
Canadians are eligible to contribute 18% of their earned income to their RRSP every year, For 2020, your contribution will be limited to 18% of your 2019 earned income, to a maximum of $27,230 plus any carry-forward contribution room that you may have.
» You get a tax deduction— Contributing to an RRSP gives you a deduction that saves you money on your income tax. It may even result in you receiving a tax refund.
» Money grows tax-free—As long as the money remains in your RRSP, all capital gains and dividend/interest income won’t be taxed.
»Tax deferral—Money held in an RRSP (both the contributions and investment gains) won’t be tax-free forever. It will be taxed when you withdraw it, presumably at retirement. However, for most people their marginal tax rate will be lower in retirement, so by deferring the tax until you’re older you will end up paying less.
RESP is an investment account where the savings for your child’s education grow tax-free. It’s never too early to start saving for your child’s post-secondary education! Opening a Registered Education Savings Plan (RESP) gives you one less thing to worry about for your child’s future.
The dreams of your children receiving a post-secondary education are getting more and more out of reach. Watching your children trying to claw their way out of debt is hard for any parent.
An RESP (Registered Education Saving Plan Alberta) can help reduce that future burden or even get rid of it entirely.
Need to Know about RESP (Registered Education Savings Plan):
» Maximum RESP contribution A lifetime limit of $50,000 per beneficiary can be contributed to an RESP, which can be kept open for up to 36 years.
» RESP tax implications: Interest earned on an RESP is tax-free. When the plan’s beneficiary starts withdrawing the money for school, only the accumulated interest is taxable as income.
» Who contributes to an RESP?
Anyone can contribute to an RESP, not just the parents of the child, so you can open or contribute to the RESP of a grandchild, niece, nephew, godson, goddaughter, neighbor’s kid, etc. You can even open an RESP for yourself.
» Subscriber: The subscriber is the individual who opens an RESP account, entering into a contract with a promoter and naming one or several beneficiaries on whose behalf the contributions are made. For individual plans, there are no restrictions on who can be a subscriber.
» Beneficiary: The beneficiary of an RESP is the person (usually the child of the subscriber, but not necessarily) who will benefit from the contributions made in the RESP.
» Promoter: Is the institution or company that sets up the RESP and pays the contributions as well as the income earned on the contributions to the beneficiaries.
» Educational Assistance Payments (EAP): EAPs are funded beneficiaries can withdraw from an RESP account to pay for their post-secondary education. They include the earnings (interest and other income) accumulated in an RESP as well as government grants but do not include the subscriber’s contributions. When withdrawn, they count as taxable income for the beneficiary.
» Refund of Contributions (ROC): An ROC is a withdrawal of the contributions. Because contributions were made from a subscriber’s after-tax income, a ROC has no additional tax penalty.
» Accumulated Income Payments (AIP): AIPs are withdrawals of the income earned on an RESP available if the beneficiary does not attend post-secondary education. It does not include any government grants, which are returned to the government. AIPs become taxable income once withdrawn. If you have an unused contribution, you can reduce the amount of tax you pay by transferring your AIP directly to your RRSP.
» Canada Education Savings Grant (CESG): The CESG is a federal grant that matches a percentage of the subscriber’s contributions to an RESP up to $7,200.
» British Columbia Training and Education Savings Grant (BCTESG): The BCTESG is a provincial incentive that provides a one-time grant of $1,200 towards an RESP for residents of BC born in 2006 or later. The BCTESG is available on the child’s sixth birthday.
» Canada Learning Bond (CLB): The CLB is a federal government grant to help income-qualified families save for their children’s post-secondary education.
The Tax‐Free Savings Account is a registered account that allows individuals to earn investment income tax-free inside a savings account.
TFSA contributions are not tax-deductible; however, any investment income within the account will not be taxed, even when withdrawn.
Who is eligible for a TFSA?
» Be at least 18 years old;
» Be a resident of Canada for tax purposes; and
» Have a valid Social Insurance Number (SIN).
How much money you can put in?
» The annual TFSA dollar limit for the years 2009 to 2012 was $5,000.
» The annual TFSA dollar limit for the years 2013 and 2014 was $5,500.
» The annual TFSA dollar limit for the year 2015 was $10,000.
» The annual TFSA dollar limit for the years 2016 to 2018 was $5,500.
» The annual TFSA dollar limit for the year 2019 to 2020 is $6,000.
There are no restrictions on the use of funds from your TFSA. As well, you can take money out of your TFSA at any time without paying taxes on it.
» The opportunity to earn investment income, tax-free
» Get income during retirement.
» The flexibility to withdraw your savings, tax-free
» The ability to contribute to a spouse’s TFSA
» A wide range of investment options for enhanced
» No impact to your government benefits
TFSA savings can be used to purchase a new car, renovate a house, start a small business, take a family vacation, etc.
A registered retirement savings plan (RRSP) is a government-approved account that allows Canadians to plan for retirement. It was first introduced in 1957, RRSPs provide a way for individuals to save and invest their money in a tax-efficient manner. RRSPs are a great way to save. They save you money on your taxes today and allow you to efficiently save for your retirement. By starting early and making steady contributions, you’ll build up a nest egg you can rely on when you reach your golden years.
Canadians are eligible to contribute 18% of their earned income to their RRSP every year, For 2020, your contribution will be limited to 18% of your 2019 earned income, to a maximum of $27,230 plus any carry-forward contribution room that you may have.
» You get a tax deduction— Contributing to an RRSP gives you a deduction that saves you money on your income tax. It may even result in you receiving a tax refund.
» Money grows tax-free—As long as the money remains in your RRSP, all capital gains and dividend/interest income won’t be taxed.
»Tax deferral—Money held in an RRSP (both the contributions and investment gains) won’t be tax-free forever. It will be taxed when you withdraw it, presumably at retirement. However, for most people their marginal tax rate will be lower in retirement, so by deferring the tax until you’re older you will end up paying less.
RESP is an investment account where the savings for your child’s education grow tax-free. It’s never too early to start saving for your child’s post-secondary education! Opening a Registered Education Savings Plan (RESP) gives you one less thing to worry about for your child’s future.
The dreams of your children receiving a post-secondary education are getting more and more out of reach. Watching your children trying to claw their way out of debt is hard for any parent.
An RESP (Registered Education Saving Plan Alberta) can help reduce that future burden or even get rid of it entirely.
Need to Know about RESP (Registered Education Savings Plan):
» Maximum RESP contribution A lifetime limit of $50,000 per beneficiary can be contributed to an RESP, which can be kept open for up to 36 years.
» RESP tax implications: Interest earned on an RESP is tax-free. When the plan’s beneficiary starts withdrawing the money for school, only the accumulated interest is taxable as income.
» Who contributes to an RESP?
Anyone can contribute to an RESP, not just the parents of the child, so you can open or contribute to the RESP of a grandchild, niece, nephew, godson, goddaughter, neighbor’s kid, etc. You can even open an RESP for yourself.
» Subscriber: The subscriber is the individual who opens an RESP account, entering into a contract with a promoter and naming one or several beneficiaries on whose behalf the contributions are made. For individual plans, there are no restrictions on who can be a subscriber.
» Beneficiary: The beneficiary of an RESP is the person (usually the child of the subscriber, but not necessarily) who will benefit from the contributions made in the RESP.
» Promoter: Is the institution or company that sets up the RESP and pays the contributions as well as the income earned on the contributions to the beneficiaries.
» Educational Assistance Payments (EAP): EAPs are funded beneficiaries can withdraw from an RESP account to pay for their post-secondary education. They include the earnings (interest and other income) accumulated in an RESP as well as government grants but do not include the subscriber’s contributions. When withdrawn, they count as taxable income for the beneficiary.
» Refund of Contributions (ROC): An ROC is a withdrawal of the contributions. Because contributions were made from a subscriber’s after-tax income, a ROC has no additional tax penalty.
» Accumulated Income Payments (AIP): AIPs are withdrawals of the income earned on an RESP available if the beneficiary does not attend post-secondary education. It does not include any government grants, which are returned to the government. AIPs become taxable income once withdrawn. If you have an unused contribution, you can reduce the amount of tax you pay by transferring your AIP directly to your RRSP.
» Canada Education Savings Grant (CESG): The CESG is a federal grant that matches a percentage of the subscriber’s contributions to an RESP up to $7,200.
» British Columbia Training and Education Savings Grant (BCTESG): The BCTESG is a provincial incentive that provides a one-time grant of $1,200 towards an RESP for residents of BC born in 2006 or later. The BCTESG is available on the child’s sixth birthday.
» Canada Learning Bond (CLB): The CLB is a federal government grant to help income-qualified families save for their children’s post-secondary education.
The Tax‐Free Savings Account is a registered account that allows individuals to earn investment income tax-free inside a savings account.
TFSA contributions are not tax-deductible; however, any investment income within the account will not be taxed, even when withdrawn.
Who is eligible for a TFSA?
» Be at least 18 years old;
» Be a resident of Canada for tax purposes; and
» Have a valid Social Insurance Number (SIN).
How much money you can put in?
» The annual TFSA dollar limit for the years 2009 to 2012 was $5,000.
» The annual TFSA dollar limit for the years 2013 and 2014 was $5,500.
» The annual TFSA dollar limit for the year 2015 was $10,000.
» The annual TFSA dollar limit for the years 2016 to 2018 was $5,500.
» The annual TFSA dollar limit for the year 2019 to 2020 is $6,000.
There are no restrictions on the use of funds from your TFSA. As well, you can take money out of your TFSA at any time without paying taxes on it.
» The opportunity to earn investment income, tax-free
» Get income during retirement.
» The flexibility to withdraw your savings, tax-free
» The ability to contribute to a spouse’s TFSA
» A wide range of investment options for enhanced
» No impact to your government benefits
TFSA savings can be used to purchase a new car, renovate a house, start a small business, take a family vacation, etc.