Do you know that you can turn your RRSP into a tax free loan? Most people don’t so we want to take this moment to let you know about the full potential of your RRSPs. We find that many people buy an RRSP ‘just because’ they know it is a good thing to do because their parents did it, or they heard it is a good thing to do through the media. But what really is the full potential of your RRSP?
There are two special programs for borrowing from your RRSPs tax-free: the Home Buyer’s Plan (HBP), and the Lifelong Learning Plan. Both of these allow you to take money out of your RRSPs tax-free with a pre-specified repayment plan. Imagine being able to use your RRSPs for a home down payment or tuition and then being able to repay the money back into your RRSPs all without paying tax on the transaction.
There is special paperwork to be completed so please speak to us if you plan on buying a home in the next 3 years, or are going back to school in the next 2 years. There are also rules regarding qualifying for each of the programs. We want to help you avoid a tax bill by properly understanding the rules and regulations behind these withdrawals.
In fact, we recently saved an employee $8,000 in taxes by doing proper RRSP tax planning. This employee called us to redeem some RRSPs and had no idea we could help him. After chatting with him and understanding his goals and needs, we were able to save him $8,000 in unnecessary taxes. =) We were very happy and excited to help.
Sadly, we’ve also run into situations where paperwork was completed late or incorrectly because they did not receive proper financial advice. To make matters worse, they got hit with a large tax bill for withdrawing their RRSPs. There is no sympathy from the government on these things.
So… whenever you plan on making a major financial decision, please connect with our team. We just might be able to save you hundreds or even thousands of dollars by providing you thoughtful, attentive financial advice.