Friday, February 26, 2016
Still Time to Lower Tax Bill
Small RSP contributions can make a big difference
Michelle MacDonald, First West Credit Union, Langley
hough the RSP contribution deadline for the 2015 tax year is just around the corner, there’s still a window of opportunity for British Columbians to invest and cut their tax bill, says a local retirement planning expert.
“Unlike tax-free savings accounts, contributing to an RSP can reduce your taxes owing or even result in a refund—and it doesn’t take as much as you think,” says Omar Aziz, an investment advisor with Envision Financial, a division of First West Credit Union. “There is a common misconception that RSPs are only for people with a lot of extra cash, but in many cases, people are surprised to find they have the money to invest when they seek the expertise of a financial advisor.”
Aziz says you don’t have to contribute the maximum allowable amount to achieve tax savings.
“Contributing as little as 10 per cent of your limit can reduce the amount of taxes you owe,” he says.
Aziz gives the example of a B.C. resident making $60,000: by contributing $1000 to an RSP, they will reduce their taxes owing by $297. By contributing $3,500, the tax savings jumps to $1,040.
Securities and securities related financial planning services are offered through Qtrade Advisor, a division of Qtrade Securities Inc., Member of the Canadian Investor Protection Fund.
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