With the March 2, 2020 deadline looming as the final day to invest in your Registered Retirement Savings Plan (RRSP) for the 2019 tax year, it’s wise to set up an appointment with your accountant to do some tax planning. Sharlane Bailey, Owner of Canwest Accounting with offices in Victoria and Langford, says she and her team can work with investors and their financial planners to look at some of the tax implications of retirement investments, whether they are RRSPs, tax-free savings accounts (TFSA) or other types of investments, including Bitcoin and other cryptocurrencies.
Canwest Accounting can help with determining your investment limit for a RRSP and TFSA, and then discuss the tax consequences for both contributing and withdrawing from these. It’s a good idea to look into long-term tax planning at any age. The last day you can contribute to an RRSP is December 31 on the year you turn 71. After that, your RRSP becomes a Registered Retirement Income Fund (RRIF), which requires you to withdraw funds every year, providing a steady income. For those who are expecting to have a large retirement pension, an accountant can help with looking at the income tax consequences of these earnings – which is essential since some individuals may find themselves bumped into a higher tax bracket when these two revenue sources are combined.
Accountants can also help with calculating the tax implications of withdrawing funds of up to $35,000 from one’s RRSP through the Home Buyers’ Plan (HBP) to buy or build a qualifying home, and whether it makes sense to pay back these funds annually versus paying income tax on the installment payment amount each year. Bailey and her team can calculate whether it’s worth repaying the withdrawn amount back into a RRSP if you don’t have the cash flow to support this.
While many people are preoccupied with retirement savings planning leading up to the RRSP deadline, Bailey reminds everyone to gather up their tax slips by early March.
“The sooner you get these into us, the sooner you get your refund and can invest in your RRSP or tax-free savings account or whatever is in your financial plan to maximize having your money work better for you,” Bailey says.
To have the exceptional team at Canwest Accounting save you time and money by providing tax planning advice or preparing your tax return, call to make an appointment or drop in at either the Victoria or Langford location.
The suggestions and advice provided by Canwest Accounting should not be relied upon in place of professional advice. You are responsible for checking the accuracy of relevant facts and opinions presented.
Note: Accountants cannot offer investment advice in place of financial planning professionals.