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Money Canada Revenue Agency: 3 smart ways to use your RRSP

21:51  13 december  2019
21:51  13 december  2019 Source:   fool.com

Young Investors: Should Bank of Montreal (TSX:BMO) Stock Be in Your RRSP?

  Young Investors: Should Bank of Montreal (TSX:BMO) Stock Be in Your RRSP? Dividend stocks have long-been popular picks for buy-and-hold RRSP investors.The RRSP is a great option for setting cash aside for the golden years. The contributions made to the plan can be used to reduce taxable income, effectively cutting the net out-of-pocket investment. Depending on your tax bracket, the reduction could have a meaningful impact on the amount you would have paid the CRA.

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This month I’ve discussed some tips for Canadians when it pertains to their registered savings plans. Today I want to look at three ways Canadians can use some tools at their disposal to save bundles down the line.

Use an RRSP Home Buyers’ Plan

The RRSP Home Buyers’ Plan should be of particular interest to millennial investors. Many are still waiting to enter the housing market, and this plan is specifically catered to help out with scrounging up a down payment in the near term.

Canadians know how high valuations have soared in this real estate market, especially in major metropolitan areas. The introduction of this plan is good timing for many investors who are looking to enter it.

Should Royal Bank of Canada (TSX:RY) Stock Be in Your RRSP in 2020?

  Should Royal Bank of Canada (TSX:RY) Stock Be in Your RRSP in 2020? Is Royal Bank of Canada (TSX:RY)(NYSE:RY) stock a buy today?The group has performed well over the long haul and bounced back to new record highs in the wake of the Great Recession. A surge in home prices over the past decade has driven much of the profit growth, and investors are wondering how long that party can last.

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Originally, the Home Buyers’ Plan allowed Canadians to borrow up to $25,000 from their RRSP to buy their first home. This year the Liberal government opted to increase this limit to $35,000, which is great news for prospective buyers. When you borrow from the Home Buyers’ Plan, you will have to pay the money back over a 15-year period.

Married? Consider a Spousal RRSP

For Foolish readers who are married, there is one great way to reduce your tax payments. The first way is to contribute to a spousal RRSP. In our hypothetical, we will focus on Lisa and John. Lisa has an annual RRSP limit of $10,000. She has the option of contributing to John’s RRSP.

Former CRA auditor jailed and fined $100,000 in bribery case

  Former CRA auditor jailed and fined $100,000 in bribery case A former Canada Revenue Agency auditor who pocketed $100,000 in bribes has been sentenced to two years in prison and ordered to pay a fine for the same amount. Nicola Iammarrone, 59, was sentenced at the Montreal courthouse Tuesday. He had pleaded guilty to two counts of bribery while working for the agency between 2002 and 2008. “When the reputation of an institution such as the CRA is tarnished by corruption within its ranks,” Quebec Court Judge Lori Renée Weitzman wrote in her decision, “the loss suffered by society as a whole is not only financial but involves the corrosion of public confidence in our government institutions.

Because he has a lower annual income, Lisa will get a tax deduction at a higher rate than Lisa would by contributing to her own account. When Lisa and John take out the cash in retirement, they will be able to withdraw from their respective RRSPs, allowing Lisa to go forward at a lower tax rate.

Use the RRSP over-contribution limit

In November I’d discussed how TFSA over-contributions could really cost investors in the long term. Fortunately, the RRSP allows more flexibility in this regard. In 1995, the Canadian government reduced the one-time over-contribution limit to $2,000 from $8,000.

This is mainly designed to act as a buffer for investors who may make a miscalculation. There are investors who deliberately over-contribute, keeping this limit in mind, in order to take advantage of tax-deferred growth and compounding. However, as you draw closer to retirement you must remember to declare those over-contributions.

Canada Revenue Agency: 57% of Canadians are using the TFSA wrong

  Canada Revenue Agency: 57% of Canadians are using the TFSA wrong The TFSA has outpaced the decades-old RRSP as the choice savings account, but still, more TFSA holders are using it the wrong way.According to the survey, 42% of the TFSA holders are using it to stash cash or as a regular savings account, and 15% have bought GICs. That’s 57% of total TFSA holders who are getting the bare minimum out of their TFSA savings. A relatively smaller number of TFSA holders have made the smart move of using their TFSA for what it was intended for: an investment vehicle.

1 dividend stock for your RRSP today

As we keep these helpful tips in mind, we should also consider a stock that would be at home in an RRSP. Enbridge(TSX:ENB)(NYSE:ENB) is one of my favourites in a portfolio geared for the long term.

Shares of Enbridge have climbed 25.8% in 2019 as of early afternoon trading on December 13. The stock has achieved average annual returns of 10.8% over the past decade. These reliable capital gains have coupled nicely with its income offering.

The company has put together a stellar 2019 so far. It won a key regulatory battle in Minnesota for its Line 3 Replacement Project.

In the year-to-date period for 2019 Enbridge has reported Adjusted EBITDA of $10 billion compared to $9.5 billion for the same period in 2018. Distributable cash flow has increased to $7.1 billion over $5.7 billion in the prior year.

Enbridge last paid out a quarterly dividend of $0.738 per share, which represents a strong 5.8% yield. The company has delivered dividend-growth for over 20 years, making it an elite dividend payer on the TSX.

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RRSP investors: Is Bank of Nova Scotia (TSX:BNS) stock a buy right now?

  RRSP investors: Is Bank of Nova Scotia (TSX:BNS) stock a buy right now? Bank stocks are popular RRSP picks. Should that continue to be the case?Let’s take a look at Bank of Nova Scotia(TSX:BNS)(NYSE:BNS) to see if it deserves to be on your RRSP buy list.

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More reading

  • Retirees: 3 Simple Ways to Protect Your CPP Pension From the Next Market Crash
  • 1 Stock Is All You Need in 2020 to Retire Wealthy
  • Millennials: Why Starting to Invest Should Be Your Top Priority Today
  • Canada Revenue Agency: 57% of Canadians Are Using the TFSA Wrong
  • 3 Ways to Earn as Much as 135% in 2020 (While Keeping the CRA Away)

Fool contributor Ambrose O’Callaghan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge. Enbridge is a recommendation of Stock Advisor Canada.

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Canada Revenue Agency: 1 Rookie RRSP Mistake to Avoid at All Costs .
The RRSP is available to Canadians for the purpose of investing and building retirement income. Bank of Nova Scotia stock and Corby stock are consistent dividend payers that will help grow your money.The Canada Revenue Agency (CRA) collects the taxes due when you start taking out money from your RRSP. At the time of withdrawals, you’re taxed at your rate, which should be lower than when you are working.

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