| Registered
Retirement Savings Plan - RRSP |
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A Canadian financial planning instrument that allows contributions
to be used in income tax deductions in hopes that people will save
for their retirement. This is in response to the fact that the Canadian
Pension Plan might not be around as we grow older.
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The
three major benefits of an RRSP are:
1) You can deduct your contributions against your year's earnings.
Every $100 put into an RRSP will save you from paying close to $50 in taxes.
2) You can share RRSP contributions with your spouse, so for tax purposes
you can avoid paying higher tax if you split the RRSP with your spouse(because
of progressive taxes).
3) You get a tax shelter from any capital gains that you receive inside
of an RRSP. |
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