The month of March marks the beginning of sugar season, but also taxes. One of the tricks to pay a little less is of course to contribute to our RRSP. In return, the deadline to do so is March 1st, which guarantees a busy day in the banking world.
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“It’s midnight minus one, but there is still Wednesday to take care of it,” suggested Jean-Sébastien Jutras, advisor at Jutras Wealth Management, on the program “A vos affaires”, on LCN.
“I’m pretty sure most financial advisors are going to work a good part of the day!”
Those who cannot make a final contribution to their RRSP or consult a specialist can wait until the next season.
“Of course there are online tools, but you have to be careful. Sometimes you don’t have access to all the products available to financial institutions. It is better to wait until next year so as not to make any mistakes,” warns Mr. Jutras.
What if we forgot to take care of it? Transferring an amount to your RRSP account and dealing with it later is an option, especially since high-interest savings accounts offer returns “over 4%”.
Is the goal with our RRSPs to maximize or save enough to reduce taxes?
“The objective is to defer the tax until later. Contributing to our RRSPs reduces our tax burden today. The idea is to contribute when we make the most money in our life and pay it out, because we will pay the tax again one day.
With a tax bracket, it is well seen to maximize our RRSP, since the exercise decreases income and increases certain benefit programs, for example.
“It could increase all tax social programs, such as the Canada Child Benefit and the Family Allowance,” explains Jean-Sébastien Jutras.
Finally, the RRSP contribution must not create other portfolio problems. You also have to know how to balance your savings.
“It is certain that the financial cushion is important, when entering a period such as a recession or more unstable. A financial cushion is never too much.”
Jean-Sébastien Jutras also advises to schedule regular bank withdrawals, weekly or monthly, to avoid being at “midnight minus one” again next year.