Weekly Tax Tips
Can I make an RRSP contribution now and deduct it in a future year?
Date: 20 Jan 2012
Registered Retirement Savings Plan (RRSP) contributions do not have to be deducted in the year in which they are made. The contributions can be deducted in that year or in any future year. You should consider deferring the deduction of your contribution if you don't have much taxable income in the current year. By deferring the deduction to a year when your marginal tax rate is higher, you will save more in taxes. Remember, however, that delaying the deduction has a cost in prepaid tax as you will not be getting the benefit of the deduction until the future. Therefore, you also have to consider the time value of money when making the decision to defer the deduction of your RRSP contributions.
This tax tip is a publication of BDO Canada LLP on developments in the area of taxation. This material is general in nature and should not be relied upon to replace the requirement for specific professional advice. The information in this tax tip is current as of 20 Jan 2012.
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