RRSP investments are an important means of generating tax savings. With the March 1, 2010 RRSP deadline approaching, Canadians’ attention is turning to topping up contributions.

For those who haven’t yet made contributions for the 2009 tax year, it is certainly not too late. Here are some tips to keep in mind when speaking with your financial advisor and preparing to file your return.

1. Carry forward tax deductions: RRSP contributions result in a tax deduction meaning that they reduce your income and taxes owed for the year. Consider carrying forward all or a portion of your RRSP tax deduction to a future higher earning year so that taxable income is reduced, thereby resulting in a greater tax deduction. This works especially well if you expect to make more money in future years.

2. Consider pension income splitting: This allows pension recipients to shift income from one partner in a higher tax bracket to the partner in the lower bracket so that incomes are similar, and therefore, tax rates.

3. Accumulate earnings: Interest and capital gains on RRSP investments accumulate tax-free and can be reinvested while held within a plan. But remember that though the funds are redeemable at anytime, they are taxable on withdrawal.

4. Take out a loan or line of credit: With historically low interest rates, consider taking out a loan to top up or maximize your contribution. In doing so, you should first consider whether the tax savings will exceed the cost of borrowing the funds. Any tax refund can be used to repay the loan or line of credit.

If you don’t have a financial plan, it’s not too late to make it more of a priority. Don’t get caught next year. You can make an appointment with a DundeeWealth financial advisor and get on a path towards meeting your financial goals. To source an advisor in your area, visit www.dundeewealth.com.

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Michelle Di Rocco
Account Director
Devon Group
Tel: 416.504.5151 ext 248
mdirocco@devongroup.ca