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Financial Education

How healthy is your financial future?

Thursday, February 2, 2012

Consolidated Credit Counseling Services of Canada

This year 60 per cent of Canadians will be contributing to their Registered Retirement Savings Plan ("RRSP") reports CIBC to save for a healthy financial future. What happened to the 40 per cent who aren't making a contribution? They may need a prescription from a qualified professional, like a trained credit counsellor or their financial advisor, to nurse their finances back to health.

The deadline to contribute to a RRSP for a deduction for the 2011 taxation year is February 29, 2012. An RRSP is a tax-effective retirement savings account because the income earned inside the RRSP accumulates tax-free. In addition, contributions made to an RRSP are deductible in the year they are made.

Here's Consolidated Credit's prescription for ways you can contribute to an RRSP before the deadline or throughout the year:

  • One of the quickest and simplest ways to contribute is by making a lump-sum cash deposit into your RRSP account providing you have money saved for this purpose.
  • If you don't have the cash, you may consider borrowing to contribute to your RRSP but the interest on the loan is not tax deductible. This isn't a viable alternative if you are unable to repay the loan within 60 – 90 days and your refund doesn't cover a significant portion of the amount owing on the loan.
  • Budgeting regular, automatic transfers into your RRSP account as an expense like your mortgage or rent payment, it is the least painful method of contributing – a small amount every month can lead to a large amount at the end of the year.

Silvia Jacinto, Senior Tax Manager, Soberman LLP, Chartered Accountants offers the following advice on your 2011 RRSP contribution:

"If you are using automatic withdrawals from your bank account, you will want to determine how much you have already contributed so that you can determine if there is room for a top-up payment. Remember, if you over-contribute to your RRSP penalties may apply.

You may contribute to your own RRSP until the end of the year in which you turn 71. You may contribute to a spousal RRSP until the end of the year in which he or she turns 71 provided that you have unused contribution room."

Consult the Canada Revenue Agency or a certified financial advisor for more detailed information on Registered Retirement Savings Plans.



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Eric Spence
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Consolidated Credit Counseling Services of Canada, Inc.
Toll Free: 1-800-656-4120 x 1041

We are a proud member of the Canadian Association of Credit Counselling Services (CACCS), the national voice for not-for-profit credit counselling services. As a CACCS member, you can trust that our trained credit counsellors strive to provide the best in professional, independent and unbiased personal finance services. We’ve helped hundreds of thousands of Canadians find relief from debt. Call us today to find out if we can help you.

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Consolidated Credit Counseling of Canada is proud to be a member and support the Toronto Board of Trade. Founded in 1845, the Toronto Board of Trade is Canada’s largest local chamber of commerce. We share their vision, passion and commitment to serving the community and to foster economic and social welfare of the City of Toronto. Call us today and see what we can do for you.

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We are proud members of the Ontario Association of Credit Counseling Services (OACCS). OACCS sets the standard of required expertise for the financial counseling industry and the only organization to offer the exclusive professional designation of Accredited Financial Counsellor Canada (AFCC). With over 500,000 people helped, you can be assured that we can find the right solution for you. Call us today.
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