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Optimizing Your RRSP

Every dollar counts when you're working hard to meet your financial obligations while also saving for retirement. This calculator shows how you could increase your expected tax refund and use it to increase your planned RRSP contribution, significantly enhancing your short and long-term RRSP savings. You have options to temporarily fund your additional contribution using an out-of-pocket strategy or a conservative short-term RRSP loan strategy (until you recoup it from your expected refund).

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1 The Marginal Tax Rate you entered was used to calculate the Expected tax refund³ shown in this calculator. The marginal tax rate estimated by the reference calculator takes all federal and provincial taxes and surtaxes into account, but only the basic personal tax credit. As a result, your actual marginal tax rate could differ from the Marginal Tax Rate used, resulting in a different Estimated tax refund³ than illustrated. In order to make the most of this strategy, seek financial advice to help you estimate your actual marginal tax rate based on your financial circumstances.

2 The deadline for a 2023 RRSP contribution is February 29, 2024. Your total available contribution limit for 2023 can be found on your 2022 Notice of Assessment. Your total available contribution limit refers to the amount you can deposit into your RRSP without penalty, however you have the discretion as to the amount of the contribution you want to deduct in the year, and you can carry any unused deduction over to be used in whole or in part in future years, indefinitely. You should seek financial advice on how much of your available deduction should be used in any tax year.

3 The Expected tax refund illustrated assumes you have enough contribution room available² and enough taxable income in the tax year to deposit and deduct the entire Total RRSP contribution illustrated. Any actual tax refund you receive may differ from the Expected tax refund illustrated, based on your financial circumstances. In order to make the most of this strategy, seek financial advice to help you estimate the tax refund you can reasonably expect when all factors are considered.

4 The long-term RRSP value illustrated is calculated using the Expected rate of return that you entered. When estimating a rate of return, you should consider your past investment yields, risk tolerance, the anticipated investment period, and other factors. For the purposes of this illustration, it is assumed that your funds remain in a registered investment vehicle for 30 years, though it should be noted that you are required to begin withdrawing registered funds in the calendar year after you turn 71.

5 RRSP loans are intended to be short-term loans, on which non-deductible interest is payable while the loan is outstanding. Therefore, it is highly recommended that RRSP loans be repaid promptly to minimize the interest payable. If the loan interest rate is higher than the earned rate in the RRSP during the lending period, there will be a net cost to borrowing.

Please note that despite the careful development of this tool, the results of the tax refund calculations are approximate and are for illustrative purposes only. Actual tax refunds will depend on your particular situation.