Investment Information

What is a Tax Shelter

Tax Shelters are methods of reducing or deferring your taxable income (often to a point in time when income is lower) which in turn will have you paying less taxes. These methods are often attractive to those with a larger income, about $100,000 and up. The two most common strategies are, RRSP's and TFSA's, mainly because the government is encouraging these investments. There are also various schemes that are technically legal and offer larger tax breaks, but might be challenged by CRA. For example "Gifted Trust Arrangements".

What is a RRSP?

A RRSP (Registered Retirement Savings Plan) is similar to a "savings bank account". Your contribution to the RRSP are limited each year, based on your incoem. RRSP's allows you to invest within the account, unlike a typical account. Typical investment in RRSP are: Mutual Funds, Bonds, Corporate Shares, Cash etc. The purpose of an RRSP is to make retirement planning easier.

What is a TFSA?

A TFSA (Tax Free Savings Account) is a special savings account. Your yearly contributions to this account are limited to $5,500. Money generated or saved here will not be taxed when withdrawn. The money you contribute, can be invested to anything that is RRSP eligible. For example; Mutual Funds, Bonds, Corporate Shares, Cash to an RRSP.

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