Re: Contributions to an RRSP in the first year in Canada
 

[QUOTE=What Limits;7659776]So is it correct to say that a born and bred Canadian cannot contribute to an RRSP in their first year of employment because they have not established a contribution head-room?

It may be a bit of a wait but this first year that you do not get to contribute (and teenagers as well during their first year of employment...) you will eventually see that year back when they are aged 65/66. You wil get that year then...I don't see it as a year missed...I just get it later on...

Re: Contributions to an RRSP in the first year in Canada
 

To clarify - the pension adjustment reduces your RRSP contribution room for the following tax year. So, if your T4 for the 2008 tax year has a pension adjustment figure of $1,000, your RRSP contribution room for 2009 will be reduced by $1,000.

Re: Contributions to an RRSP in the first year in Canada
 

A T4 is an end of year tax summary your employer gives you - like a P60 in the UK.

Re: Contributions to an RRSP in the first year in Canada
 

I'm sorry to hijack this thread. We are on a TWP and unsure of our long term plan (to stay in Canada or not). Would it be sensible to contribute to RRSP? If not what other short term investment should we consider? We have already maxed out our TFSA as this won't have much of a problem if we decide not to stay. I would appreciate your replies. many thanks.

Re: Contributions to an RRSP in the first year in Canada
 

I've decided to wait until we get PR before I start contributing to a RRSP.... Don't really want the hassle of sorting it out if we ended up having to go back to the UK....

Re: Contributions to an RRSP in the first year in Canada
 

G77 thanks for your replies. We have thought about it postponing our contribution hence we have only maxed out TFSA. On the other hand I don't want to miss out as well. Is there no benefits of putting RRSP now and withdraw let's say in 3 yrs time? Will the benefits be same as putting in a normal term deposits or GIC for 3 yrs?

Re: Contributions to an RRSP in the first year in Canada
 

If you put money into an RRSP you get a tax refund at your marginal rate in the year you make the contribution. When you withdraw funds from your RRSP you pay tax at your marginal rate in the year you withdraw it.

It is your choice.

Within the RRSP the funds grow tax free. There can be a significant compounding effect over the years, but it won't make that much difference in the short-term. Keep in mind that if the RRSP is invested in mutual funds the bid-offer spread means you will likely lose money if you sell within a year or two of investing. It may be better to invest in GICs until you know what you intend to do longer-term.

Re: Contributions to an RRSP in the first year in Canada
 

JonboyE thanks for your replies. I guess we just need to weigh the pros and cons about RRSP. Also I have started working last year and have received my T4 from my employer. Does it mean that I can contribute to my RRSP this year if we wanted to?

Re: Contributions to an RRSP in the first year in Canada
 

Yes you can but you have to do it by March 1st if you want your contribution to count towards 2009 tax return. Otherwise the contribution receipt will count for next years return.

Mutual funds are only considered really to be a long term investment-at least holding them for 10 years- don;t ever consider putting funds into Mutual Funds if you want to u.se them for the First Time buyers home plan scheme

Re: Contributions to an RRSP in the first year in Canada
 

Shelly thanks for your reply. I guess we just need to focus on short term investment until we know our definite plan for the future.. Speaking about short term investment (not mutual fund) I've read that bons has better rates than normal savings accounts or term deposit. Do I need to see a investment advisor if I want to invest in bonds? Can I not purchase or do it on my own?

Re: Contributions to an RRSP in the first year in Canada
 

If you started working in 2009 then you will earn contribution room for 2010. The deadline today is to make RRSP contributions that count for 2009. You will not have any contribution room for 2009 so if you invest any money today take care when you complete your tax return.

Re: Contributions to an RRSP in the first year in Canada
 

You can purchase Provincial Bonds when they come out (depends where you live), otherwise I would contact an Investment advisor, although I am always sceptical of them as they are on commission only and some of them are not ethical folk....

Re: Contributions to an RRSP in the first year in Canada
 

I am always sceptical of them as they are on commission only and some of them are not ethical folk....

Does your thinking apply to other commission income people such as car salespeople, mortgage brokers and REALTORS?

Re: Contributions to an RRSP in the first year in Canada
 

I called CRA this year- its my first year and I was told flat out I had no room. :frown:

Re: Contributions to an RRSP in the first year in Canada
 

No because I was one- but all I am saying is that you have to pick very carefully- go on the recommendation of someone who has used them and been very happy with the service and results.