A Registered Retirement Saving Plan, or RRSP, is a special type of investment account designed to help Canadians save for retirement. The main advantage of an RRSP account, as compared to a regular investment account, is the tax benefits it offers. For now, just know that the contribution made to an RRSP - which can be made up to a certain limit - are tax free and that the money within an RRSP can compound without your having to pay taxes on the gains.
All investments within an RRSP account grow tax deferred. In other words, any profits made on investments within an RRSP account in the form of interest, dividends or capital gains are not immediately taxable to you as income.
Note that there is a difference between tax deferred and tax free, however. RRSP investors do have to pay taxes on the profits in their RRSP, but this does not occur until the funds are withdrawn. Tax deferral remains a benefit because, in theory, income tends to be lower in retirement than in your peak earning years.
The second major tax benefit comes in the form of a tax credit. What this means is that your taxable income is reduced by the amount you contribute - up to a certain point.
Annual Limit: 18% of eligible income up to $26,010
+/— any Pension Adjustment
+ Previous Contribution Room
Deadline: March 1st, 2018
Pretty much any rule query you could imagine will be answered on the TFSA Rules You Need To Know page, but here are two
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