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By Gigi Suhanic
National Post
FP Weekend Section
Saturday, March 5, 2005
Question: I had some RRSP contributions in 2003 and because my income was low last year, I didn't claim them on my taxes thinking it would be better to wait until this tax year. Can I skip claiming it on my 2004 return and keep it for 2005?
Adrian Mastracci, investment counsel at Vancouver’s ‘fee-only’ KCM Wealth Management, says, "The general approach once you've made a contribution is to take the RRSP deduction as early as you possibly can.”
Answer: You can your carry forward your RRSP contributions as long as you want and deduct them in any tax year provided you have taxable income.
Adrian Mastracci, investment counsel with KCM Wealth Management in Vancouver, says he sometimes advises clients -- especially those in business -- to hold back on deducting an RRSP contribution or to only deduct a part of it depending on whether they are having a high-income or low-income year.
However, "the general approach once you've made a contribution is to take the RRSP deduction as early as you possibly can," he says, especially if the change in your marginal tax rate or income will be small over the next few years.
"If you can't see a lot of upside [to waiting] you might as well take it as early as you can."
On another RRSP note, for those who have already made their 2005 contribution -- you know who you are -- Mr. Mastracci recommends you file form T1213 "Request to reduce tax deductions at source." The CRA will ask your employer to reduce your taxable income by an amount equivalent to your contribution. "Instead of waiting to file for 2005 you can get that rebate now," Mr. Mastracci says. You can earn some income on the rebate instead of loaning it to the government at no interest.
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