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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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TAX DEDUCTIBLE Your RRSP contributions are tax deductible. That means you can claim them as a tax deduction when you file your income tax retum and lower the tax you pay Example: A contributors tax rate is 30%. This means that an investment of 100 in RRSP will save 30 in taxes till their limit of contribution. DEDUCTIBLE TAX TAX DEDUCTIBLE REDUCED TAXABLE INCOME When you put money into an RRSP, it reduces your taxable income for the year, and may produce a tax refund You can use the refund to pay down a mortgage or other debt, save for a child's education or pursue other financial goals. In this way, an RRSP helps you prepare for retirement and your other goals. Talk to a financial advisor about the best way to use an RRSP to achieve your goals. REDUCED TAXABLE INCOME TAXABLE INCOME HOW MUCH CAN A PERSON CONTRIBUTE Anyone who files an income tax return and has eamed income can open and contribute to an RRSP There are limits on how much you can contribute to an RRSP cach year. You can contribute the lower of COLUREUE • 18% of your earned income in the previous vcar, or • the maximum comribution amount for the tax year 2021: $27,830. CONTRIBUTING If you are a member of a pension plan your pension adjusument will reduce the amount you can contribute to yoOur RRSP Contribute WHAT TYPES OF INVESTMENTS CAN GO IN AN RRSP Nearly any type of investment can be held in a registered retirement savings plan: • Cash Gold and silver bars • ETFs (Exchange-Traded Funds ) • Savings bonds • Government bonds Corporate bonds • Strip bonds Mutual funds GICS (Guaranteed Investment Certificates) Equities (both Canadian and foreign stocks) •Canadian mortgages • Morngage-backed securities Income tusts Investments WHY DID THE GOVERNMENT SET THIS UP • Registerod Retirement Savings Plan (RRSP) was ereated in 1957 as part of the Canadian Income Tax Act. • They are registered with the Canadian government and overseen by the Canada Revenue Agency (CRA), which sets rules governing annual contribution limits, contribution timing, and what assets are allowed. • The government of Canada has provided this tax deferral to Canadians to encourage them to save for retirement, which will help the population rely less on the Canadian Pension Plan (CPP) to fund retirement. Canada of Canada Tel Government Gouvernement du Canada
Transcribed Image Text:TAX DEDUCTIBLE Your RRSP contributions are tax deductible. That means you can claim them as a tax deduction when you file your income tax retum and lower the tax you pay Example: A contributors tax rate is 30%. This means that an investment of 100 in RRSP will save 30 in taxes till their limit of contribution. DEDUCTIBLE TAX TAX DEDUCTIBLE REDUCED TAXABLE INCOME When you put money into an RRSP, it reduces your taxable income for the year, and may produce a tax refund You can use the refund to pay down a mortgage or other debt, save for a child's education or pursue other financial goals. In this way, an RRSP helps you prepare for retirement and your other goals. Talk to a financial advisor about the best way to use an RRSP to achieve your goals. REDUCED TAXABLE INCOME TAXABLE INCOME HOW MUCH CAN A PERSON CONTRIBUTE Anyone who files an income tax return and has eamed income can open and contribute to an RRSP There are limits on how much you can contribute to an RRSP cach year. You can contribute the lower of COLUREUE • 18% of your earned income in the previous vcar, or • the maximum comribution amount for the tax year 2021: $27,830. CONTRIBUTING If you are a member of a pension plan your pension adjusument will reduce the amount you can contribute to yoOur RRSP Contribute WHAT TYPES OF INVESTMENTS CAN GO IN AN RRSP Nearly any type of investment can be held in a registered retirement savings plan: • Cash Gold and silver bars • ETFs (Exchange-Traded Funds ) • Savings bonds • Government bonds Corporate bonds • Strip bonds Mutual funds GICS (Guaranteed Investment Certificates) Equities (both Canadian and foreign stocks) •Canadian mortgages • Morngage-backed securities Income tusts Investments WHY DID THE GOVERNMENT SET THIS UP • Registerod Retirement Savings Plan (RRSP) was ereated in 1957 as part of the Canadian Income Tax Act. • They are registered with the Canadian government and overseen by the Canada Revenue Agency (CRA), which sets rules governing annual contribution limits, contribution timing, and what assets are allowed. • The government of Canada has provided this tax deferral to Canadians to encourage them to save for retirement, which will help the population rely less on the Canadian Pension Plan (CPP) to fund retirement. Canada of Canada Tel Government Gouvernement du Canada
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