{"id":556,"date":"2023-01-13T17:01:32","date_gmt":"2023-01-14T01:01:32","guid":{"rendered":"https:\/\/keepwhatsyours.ca\/stage\/?p=556"},"modified":"2023-01-16T11:11:25","modified_gmt":"2023-01-16T19:11:25","slug":"january-2023","status":"publish","type":"post","link":"https:\/\/keepwhatsyours.ca\/stage\/butterblog\/january-2023\/","title":{"rendered":"Tax Tip \u2013 RRSP vs TFSA"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><span style=\"text-decoration: underline;\">Tax Tips<\/span><\/h3>\n\n\n\n<p class=\"has-medium-font-size\"><strong>RRSP vs. TFSA<\/strong><\/p>\n\n\n\n<p>If you&#8217;re like most Canadians, you&#8217;ve probably got a few questions about RRSPs and TFSA\u2019s.&nbsp;<\/p>\n\n\n\n<ul>\n<li>Is one better than the other?&nbsp;<\/li>\n\n\n\n<li>Are they even worth investing in?&nbsp;<\/li>\n\n\n\n<li>How do they work?<\/li>\n<\/ul>\n\n\n\n<p>In this guide, we&#8217;ll answer those questions and more. We&#8217;ll also help you decide which one is right for your situation\u2014and show you how to make sure your money is invested wisely!<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>Registered Retirement Savings Plan<\/strong><strong> <\/strong><strong>(RRSP)<\/strong><\/p>\n\n\n\n<p>RRSPs are a great idea for most taxpayers but especially for high-income earners.&nbsp;<\/p>\n\n\n\n<p>Contributions to an RRSP will lower your taxable income and thus directly reduce your taxes payable.&nbsp;<\/p>\n\n\n\n<p>In Canada, as your income increases, tax rates increase like a step ladder. Therefore, high-income earners receive a greater RRSP discount or refund from their RRSP contributions.<\/p>\n\n\n\n<p>To put this into context, we\u2019ve provided 2 income situations in Canada:<\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table><tbody><tr><td><\/td><td><strong>Income # 1<\/strong><\/td><td><strong>Income # 2<\/strong><\/td><\/tr><tr><td><strong>Income<\/strong><\/td><td>$150,000<\/td><td>$50,000<\/td><\/tr><tr><td><strong>RRSP Contribution<\/strong><\/td><td>$10,000<\/td><td>$10,000<\/td><\/tr><tr><td><strong>Savings (After Tax)<\/strong><\/td><td>$4,500<\/td><td>$2,000<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<p>The table shows that if you earn over $150K in Canada, a $10K RRSP contribution will save you at least $4,500. However, the same $10K RRSP contribution for someone making $50K will only save them approximately $2,000.<\/p>\n\n\n\n<p>You can generally contribute up to 18% of your previous year\u2019s earned income, up to an annual maximum ($29,210 for 2022) plus any unused RRSP room from prior years. An investment in a plan can grow tax-free until you withdraw the funds.&nbsp;<\/p>\n\n\n\n<p>As the funds are geared toward providing retirement income, the key is to withdraw the funds in retirement when your income \u2014 and therefore your tax rate \u2014 is potentially lower.<\/p>\n\n\n\n<p>Consider investing in RRSP when your income is above $100K to get the maximum refund from your investment.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>Tax-Free Savings Account (TFSA)<\/strong><\/p>\n\n\n\n<p>TFSA\u2019s are a great idea for all Canadians but they do not provide you any immediate tax relief.&nbsp;<\/p>\n\n\n\n<p>Contributions are made with after-tax dollars and no tax is applicable when amounts are withdrawn, meaning that investments can grow tax-free.&nbsp;<\/p>\n\n\n\n<p>TFSAs also offer some flexibility over RRSPs: Savers can access their funds (depending on their investment type) and the amounts withdrawn can be re-contributed in the following tax year.<\/p>\n\n\n\n<p>Concentrate on increasing your TFSA balance when your income levels are low (say under $50K) as contributing to a TFSA will provide you liquidity and flexibility.&nbsp; As your income increases it is better to start investing in an RRSP.<\/p>\n\n\n\n<br>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"text-decoration: underline;\">BNI Profile<\/span><\/h3>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Robert<\/strong> <strong>Monterio<\/strong>,<strong> <\/strong><em>Barrister &amp; Solicitor<\/em><\/p>\n\n\n\n<p>Robert Monterio holds the commercial lawyer seat at BNI. We\u2019ve included a short interview so you can learn more about him and his experience with BNI.<\/p>\n\n\n\n<ol>\n<li><strong><em>What seat do you hold at BNI? And Briefly what do you do?&nbsp;<\/em><\/strong><\/li>\n<\/ol>\n\n\n\n<p><em>Commercial lawyer. We assist clients in all aspects of starting\/acquiring, operating, and selling a business.<\/em><\/p>\n\n\n\n<ol start=\"2\">\n<li><strong><em>How has BNI helped you grow your business?&nbsp;&nbsp;<\/em><\/strong><\/li>\n<\/ol>\n\n\n\n<p><em>Greatly. Both from direct revenue as well as shaping a positive business mindset.<\/em><\/p>\n\n\n\n<ol start=\"3\">\n<li><strong><em>What\u2019s the best part of being a BNI member?&nbsp; <\/em><\/strong><strong><br><\/strong><em>Multi-stage referrals from past members and clients.<\/em><\/li>\n<\/ol>\n\n\n\n<ol start=\"4\">\n<li><strong><em>What\u2019s a skill you learned from BNI that has helped you?&nbsp;&nbsp;<\/em><\/strong><\/li>\n<\/ol>\n\n\n\n<p><em>The value of reciprocity. The Givers Gain mentality!<\/em><\/p>\n\n\n\n<br>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"text-decoration: underline;\">Quote of the Month<\/span><\/h3>\n\n\n\n<blockquote class=\"wp-block-quote is-style-default is-layout-flow wp-block-quote-is-layout-flow\">\n<h4 class=\"has-medium-font-size wp-block-heading\">\u201cLife is really simple, but we insist on making it complicated.\u201d&nbsp;<\/h4>\n<cite>            <strong>&#8211; Confucius<\/strong><\/cite><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Tax Tips RRSP vs. TFSA If you&#8217;re like most Canadians, you&#8217;ve probably got a few questions about RRSPs and TFSA\u2019s.&nbsp; In this guide, we&#8217;ll answer those questions and more. We&#8217;ll also help you decide which one is right for your situation\u2014and show you how to make sure your money is invested wisely! Registered Retirement Savings<span class=\"excerpt-hellip\"> [\u2026]<\/span><\/p>\n","protected":false},"author":1,"featured_media":297,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/keepwhatsyours.ca\/stage\/wp-json\/wp\/v2\/posts\/556"}],"collection":[{"href":"https:\/\/keepwhatsyours.ca\/stage\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/keepwhatsyours.ca\/stage\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/keepwhatsyours.ca\/stage\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/keepwhatsyours.ca\/stage\/wp-json\/wp\/v2\/comments?post=556"}],"version-history":[{"count":57,"href":"https:\/\/keepwhatsyours.ca\/stage\/wp-json\/wp\/v2\/posts\/556\/revisions"}],"predecessor-version":[{"id":715,"href":"https:\/\/keepwhatsyours.ca\/stage\/wp-json\/wp\/v2\/posts\/556\/revisions\/715"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/keepwhatsyours.ca\/stage\/wp-json\/wp\/v2\/media\/297"}],"wp:attachment":[{"href":"https:\/\/keepwhatsyours.ca\/stage\/wp-json\/wp\/v2\/media?parent=556"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/keepwhatsyours.ca\/stage\/wp-json\/wp\/v2\/categories?post=556"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/keepwhatsyours.ca\/stage\/wp-json\/wp\/v2\/tags?post=556"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}