The interest-free loans Canadians give to their governments keeps rising – it’s up from $1646 in the 2012 tax filing year to $1655 in 2013 – that’s $138 a month that could be going into TFSAs or RRSPs instead.
Consider saving $1655 in a TFSA for 40 years at a 3% return: you’ll have close to $128,900 in your savings according to a nifty TFSA calculator from CIBC.
Invest that refund into an RRSP first and tax savings of close to $500 would result if marginal tax rates were 30%. Adding those savings to a TFSA would increase the eventual pot to over $165,000.
Canadians must pay the correct amount of tax, but no more. Consider seeing a tax professional for help in reducing our withholding taxes throughout the year so you can turbo-charge your savings. Tax form T1213 is required to do so.
It’s Your Money. Your Life. To reach your financial goals sooner, pay yourself first, by managing your tax withholdings. With the tax preferred investments available in Canada, it can pay off in a very big way.
Evelyn Jacks is president of Knowledge Bureau and author of 51 books on tax and personal wealth management. She is also the founder and director of the Distinguished Advisor Conference (DAC). The theme of the 2014 three day think tank in Horseshoe Bay, Texas Nov 9-12 will be “Think BIG: Find the Sweet Spots in Wealth Management” Follow Evelyn on Twitter at @EvelynJacks.