On my rainy drive home tonight, I was concerned when I heard news that it was surveyed that 50% of Canadians will not be contributing to their RRSP’s this year. I believe the common fear is that there is going to be a recession in the US and that stocks are losing value, which is true. However, this is actually a good thing, it means we are able to purchase RRSP Mutual Fund units at a much lower price.

Earlier this morning I waited outside of my CIBC until it opened and borrowed 3 grand to contribute to my RRSP. Now why would I put so much money into a retirement savings plan?  RRSP’s is the best way for taxpayers to defer tax. Let me illustrate a quick example, if you contributed $10,000 and then borrowed $6,667, so now you have $16,667 and your marginal tax rate is 40%, your tax return for your contributions will be 6,667!

Heres a list of the 2007 Ontario Marginal Tax rates:

• first $35,488 21.05%
• over $35,488 up to $37,178 24.15%
• over $37,178 up to $62,485 31.15%
• over $62,485 up to $70,976 32.98%
• over $70,976 up to $73,625 35.39%
• over $73,625 up to $74,357 39,41%
• over $74,357 up to $120,887 43.41%
• over $120,887 46.41%

The deadline to contribute to your RRSP’s is tomorrow, I urge everyone to take advantage of this great tax brake.

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