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That time of year quickly approaches. The infamous tax season!It’s not too late. You can still take advantage of your RSP’s for the 2011 tax year in Canada (by the end of February!).Here is a little trick. This may not work for you and you should certainly discuss this with your adviser¬†first.What if you borrowed $5,000 for your RSP? The banks typically give RSP loans at or just over prime specifically for this purpose. Many who can afford to do this will get back somewhere upwards of 30% of their contribution.

Let’s say you are at 40% marginal tax rate. Your refund is $2,000. Now you take the $2,000 and put that into your TFSA.

The end result is you have $7,000 working for you in tax deferred and tax free vehicles. And it only cost you $5,000 plus the interest. How much interest depends on how long you take to repay the loan. Maybe the next time you get a bonus?

Alternatively, you take the refund and apply it against the RSP loan. If you choose to leave the payment alone, it will shorten your pay back period and interest. Now you have $5,000 working for you that only cost you a little over $3,000!

Make it a great day,


P.S. What am I thankful for today? I’m thankful for a safe bus ride to work. I’m thankful for apples! I’m thankful for all of the wonderful things I have learned so far.

What are you thankful for today?

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