TWENTY RRSP tips
from the Chartered
Accountants of British
Columbia:

RRSP Tip #1: What is

an RRSP?

A Registered Retired
Savings Plan is a government
approved plan to encourage
you to save money for your
retirement years.

Within your personal
limit, your contributions are
tax deductible. You can have
any number of RRSPs.

Not only do you invest
some money that would oth-
erwise be paid in income ta.
but the biggest advantage ts
that the earnings of an RRSP
are not taxed until with-
drawn.

This allows 100% of the
earnings to be reinvest-d and
compounded. This greatly
increases the growth in value
of your RRSP.

Ideally, you make RRSP
deductions in your highest
income years, and get the
funds out at a lower tax rate
in retirement.

RRSP Tip #2: Who is
eligible to contribute
to RRSPs? a

Anyone with “earned
income” subject to Canadian
taxation, including non-resi-
dents, may contribute to an
RRSP.

You can make part or all
of any RRSP contributions to
a plan in your spouse’s name.
You, as the contributor, are
still entitled to the tax
deduction.

For this purpose, a spouse
must be of the opposite sex,

and cither a legel spouse, or a
common-law spouse with
whom you have co-habitated
for the last 12 months.

To maximize your Song-
term tax savings, RRSP con-
tributions should always go
into the name of the spouse
who will otherwise have the
lower income in retirement.

RRSP Tip #3: Where
can an individual get
an RRSP?

RRSPs are available from
banks, trust companies, cred-
it unions, life insurance com-
panies, investment dealers
and mutual funds.

You can have any number
of RRSPs. There are three
basic types: deposit type
pians, mutual funds, and self-
directed plans.

Look for the plan that has
the best potential return for
the risk you are prepared to
take.

Determine if there are any
fees, and take them into
account in comparing the
anticipated annual growt

A chartered accountant
can advise you on the tax
advantages of an RRSP and
the type of plan most suitable
for you.

RRSP Tip #4: How
much do RRSPs
reduce your taxes?

To give you a rough idea

of the tax reduction from
RRSP contributions, here are
three rules of thumb for
1999 RRSP deductions:
@ If your income is less than
$30,000 a $1,000 RRSP
would reduce yourl999
taxes by about $250.

peas

NEWS photo Mike Wakefiotd

CONSIDER a financial adviser’s opinion when buying an RRSP, but do your homework first. The Chartered
Accountants of B.C. offer 2@ RRSP tips to demystify RRSPs and make investing easier.

@ If your income is between
$30,000 and $59,000, a
$1,600 RRSP would reduce
your 1999 taxes by about
$400.

If your income is more
than $59,000, a $1,000
RRSP would reduce your
1999 taxes from $490 to
$520.

_ Look into the amount
you can save with an RRSP
today.

RRSP Tip #5: RRSP

limits

When decermining how
much you can contribute to
RRSPs, keep in mind there is
at least one more step to the
calculation for members of
Registered Pension and
Deferred Profit Sharing
Plans.

Ordinarily, your
deductible contributions to
RRSPs are limited to 18% of
your prior year’s earned
income, to a maximum of
$13,500.

If you’re a member of a
Registered Pension Pian or a
Deferred Profit Sharing Plan,
this amount is reduced by
the pension adjustment

amount(s) reported on your ©

prior year T4 slips.

A pension adjustment
reflects the value of the
future benefit you are enti-
ted to as a result of being a
plan member for the year.

Your 1999 RRSP deduc-
tion limit will be on your
1998 Notice of Assessment.

There may be other
adjustments to your RRSP
deduction limit if there have
been significant changes to
your Registered Pension Plan
coverage during the year.

RRSP Tip #6: Earned
income and your
RRSP

Your maximum RRSP
deduction is based on your
earned income in the previ-

00% I

Multi-Rater GiC

‘First year rate, includes 1% bonus when deposited in your ASP.
Available for a limited time only. Guaranteed returns: 6% the first year
and an average of 6.25% over five years. Flexibility clause: the GIC
Muti-Rater is redeemable after two years and at each anniversary date.

Certain conditions apply. interest rate subject to change without notice,

———“
ste

LAURENTIAN BANK
- OF CANADA

ous year and unused contri-
bution room from prior
years. :
What is considered earned
income? .

Common forms of earned
income include income from
employment, from your
unincorporated business, and
net rental income. ;

Losses from these sources
reduce earned income.

Your earned. income is
increased by any taxable
alimony or maintenance you
receive and reduced by any
deductible alimony or main-
tenance you pay during the
year. _
Earned income does not ~
include investment income -

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