Tick ball at best. Still no logical explanation beyond . and Clunk agree? Strike two...Hey, dumbass, I'm not "hiding behind ." - scroll up
and re-read the thread. I was the FIRST person to state
that RRSP's are a ripoff, and then . and Clunk agreed.
You don't want to do any research or listen to the voices
of experience before you invest your money, why would I
care?
T4 and Tax
Moderators: sky's the limit, sepia, Sulako, lilfssister, North Shore, I WAS Birddog
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Cat Driver
- Top Poster
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O.K. lets look at this by asking a simple question.
Please point out where the taxation department has ever put into place any new scheme that did not in the bottom line bring in more money to run and expand the government.
Then tell me why you feel that contributing to the support of an ever expanding army of drones will benefit you more than handling your own earnings.
As to taxation just looking at your deductions from your pay check is not the whole story...as soon as you start to spend what is left you are really into what taxation really costs you.
Hell if a hooker gives a blow job and declares the earnings the government has the nerve to charge her a " service " tax.
Anyhow tax evasion is a serious issue and not recommended...tax avoidance is a God given duty.
Please point out where the taxation department has ever put into place any new scheme that did not in the bottom line bring in more money to run and expand the government.
Then tell me why you feel that contributing to the support of an ever expanding army of drones will benefit you more than handling your own earnings.
As to taxation just looking at your deductions from your pay check is not the whole story...as soon as you start to spend what is left you are really into what taxation really costs you.
Hell if a hooker gives a blow job and declares the earnings the government has the nerve to charge her a " service " tax.
Anyhow tax evasion is a serious issue and not recommended...tax avoidance is a God given duty.
The hardest thing about flying is knowing when to say no
After over a half a century of flying no one ever died because of my decision not to fly.
After over a half a century of flying no one ever died because of my decision not to fly.
For those of us who are still quite a ways away, what happens when you hit 70 and try to take money out of your RRSP? Let me guess - you have to pay income tax on it, which is fine by me because I avoided paying tax on that income by putting it in an RRSP in the first place. Is there other fine print I should be aware of? If you don't want to spell it all out here do you have a link to anything that gives more information on these hidden traps in RRSPs?
But wait,you paid tax on that money once already ?( didn't you ? )
So when you contrbuite to an RRSP, you get a small marginal tax break off your next years income tax The RRSP , then grows and WHEN you withdraw it , BAM guess what , you pay tax on ALL of it( again ) ,..the principal and any interest ( hopefully ) you made . However IF you take that had earned cash ( which you have paid income tax on once already , and put it into a tax free or tax sheltered investment ,you get all of it back , principal and interest , with very little or NO tax payable !
A short term more pain , for a longer term better gain ! Talk to a knowable tax planner they will guide you , 
( for a small fee) .
Regards
So when you contrbuite to an RRSP, you get a small marginal tax break off your next years income tax The RRSP , then grows and WHEN you withdraw it , BAM guess what , you pay tax on ALL of it( again ) ,..the principal and any interest ( hopefully ) you made . However IF you take that had earned cash ( which you have paid income tax on once already , and put it into a tax free or tax sheltered investment ,you get all of it back , principal and interest , with very little or NO tax payable !
A short term more pain , for a longer term better gain ! Talk to a knowable tax planner they will guide you , ( for a small fee) .
Regards
That's correct - a RRSP is a tax-deferred plan that grows tax free (in whatever investment vehicle you choose, subject to certain limitations). Eventual withdrawals from a RRSP are taxed as income at that time. Any dividends that are derived from an investment within a RRSP are also taxed as income if you choose to receive them as such and not re-invest.Goose757 wrote:Uh, I think my RRSP contributions are pre-tax. Aren't everyone elses?
There seem to be a lot of mis-conceptions of what a RRSP is and how they work.
At the end of the day, you'll probably see better returns by doing your due diligence and not relying on financial advice from a free & anonymous aviation internet forum. In that respect, past performance can most definitely be taken as an indicator of future performance.
Hey look! Someone actually posted something helpful on the topic. Why the heck does the government do that? So if you have your RRSP up to $1-2M you're basically going to lose half of it when you turn 70?mcrit wrote:Hi, RRSPs do help you cut your tax bill today, but when you hit 70 years of age you must convert them into a RIF (may be wrong on that acronym). At this point the government treats it like you got all that income in one year, thus a large tax bill.
If you think about it though, that shouldn't be that big of a deal. Its your money and EVENTUALLY you're going to have to pay taxes on it whether its in an RRSP or elsewhere.
Would you not start by taking out fairly large chunks from say age 60 so that you're at the top end of a reasonable tax bracket? That way when you turn 70 you don't lose 50% of the whole lump sum?
Anyone?
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complexintentions
- Rank 10
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- Location: of my pants is unknown.
It's interesting that the ones who seem to be opposed to RRSP's are those with more years under their belt, and thus have some experience in handling finances over a longer period of time - whether wisely or foolishly, they have seen what works and doesn't.
And those who earnestly expound on the sheer genius of RRSP's seem to fit a younger demographic. Ahh...spreadsheets. The last word.
I think any discussion of taxation issues in Canada has to include population demographics, as this is what sustains taxation. My own suspicion is that by the time boomers all move along, there won't be near enough in the kitty for the younger generation(s) - of which I am one. As far as I can see Revenue Canada (or whatever it's called now) is one giant Ponzi scheme. Hence I categorically do not contribute to RRSP's.
However the discussion is somewhat moot for me, as a non-resident Canadian citizen working and living in a tax-free jurisdiction. But if I DID live in Canada...I would not contribute to RRSP's...I would rather take the taxation hit upfront and use tax avoidance techniques not so dependent on the whim of Canadian tax law. Pretending to be able to predict what will happen when you're 70 is foolish, IMO.
And those who earnestly expound on the sheer genius of RRSP's seem to fit a younger demographic. Ahh...spreadsheets. The last word.
I think any discussion of taxation issues in Canada has to include population demographics, as this is what sustains taxation. My own suspicion is that by the time boomers all move along, there won't be near enough in the kitty for the younger generation(s) - of which I am one. As far as I can see Revenue Canada (or whatever it's called now) is one giant Ponzi scheme. Hence I categorically do not contribute to RRSP's.
However the discussion is somewhat moot for me, as a non-resident Canadian citizen working and living in a tax-free jurisdiction. But if I DID live in Canada...I would not contribute to RRSP's...I would rather take the taxation hit upfront and use tax avoidance techniques not so dependent on the whim of Canadian tax law. Pretending to be able to predict what will happen when you're 70 is foolish, IMO.
I’m still waiting for my white male privilege membership card. Must have gotten lost in the mail.
It amazing how much bad information is out there.
Pika, Goose, Pay some attention to the voices of experience.
RRSP are an option but not a good one. You guys want reasons from Hedley and Cat that you are not willing to research yourselves. Here it is.
RRSPs are not tax shelters! They are deferal plans. Pay now or pay later, later costs more.
When the time comes to withdrawl moneys from your RRSP it will be taxed as plain vanilla income (ie. full bracket taxation) regardless of how your money inside the plan grew.
In the real world, dividend income comes with a tax credit, your only taxed on 50% of capital gains. Those are REAL tax breaks! Not deferals.
So to prove the old farts correct, let's compare. 35% tax bracket. Sure you get a third of the moneys you put into your RRSPs back now. Then your taxed 100% as income when you take it out.
Outside of RRSP, you buy property, (always the safest long term bet because of the universal planetary formula) with after tax $$$. Let it appreciate in capital. Down the road you sell. Add only half of your capital gain to your tax bill.
Now think carefully. Pay tax on only 1/2 AND don't have the other half pushing your income into the next higher tax bracket. Way gooder!
Geezers (I saw that in the most respectful manner ., Hedly) have wisdom to share.
Pika, Goose, Pay some attention to the voices of experience.
RRSP are an option but not a good one. You guys want reasons from Hedley and Cat that you are not willing to research yourselves. Here it is.
RRSPs are not tax shelters! They are deferal plans. Pay now or pay later, later costs more.
When the time comes to withdrawl moneys from your RRSP it will be taxed as plain vanilla income (ie. full bracket taxation) regardless of how your money inside the plan grew.
In the real world, dividend income comes with a tax credit, your only taxed on 50% of capital gains. Those are REAL tax breaks! Not deferals.
So to prove the old farts correct, let's compare. 35% tax bracket. Sure you get a third of the moneys you put into your RRSPs back now. Then your taxed 100% as income when you take it out.
Outside of RRSP, you buy property, (always the safest long term bet because of the universal planetary formula) with after tax $$$. Let it appreciate in capital. Down the road you sell. Add only half of your capital gain to your tax bill.
Now think carefully. Pay tax on only 1/2 AND don't have the other half pushing your income into the next higher tax bracket. Way gooder!
Geezers (I saw that in the most respectful manner ., Hedly) have wisdom to share.
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Cat Driver
- Top Poster
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- Joined: Sun Feb 15, 2004 8:31 pm
Cash, with no paper trail.Out of curiosity, what tax avoidence technique would you use as a salary earner?
If the taxman asks you to show proof of income what you do is calmy tell him you live off those government scratch and win tickets.
That is what I told them some years ago when I was audited by two of their finest, they got real testy with me and called me a liar.
So being little o'l me who does not take kindly to assholes I calmly said.....Don't you call me a liar you co.ksuckers if you are convinced I can't live off scratch and win tickets tell it to a Judge and lets let the news media report on " WHY " you think I can't live of government scratch and win tickets......anyhow they did manage to figure out where that was going and dropped that line of thinking.
But ...never understimate the tenacity of a government tax collector nor the power they wield.....best pay your taxes on all income that has a paper trail to connect you to said income.
There is no paper trail to scratch and win...but it would be difficult to actually live off that method, just check with those two assholes who audited me.
Last edited by Cat Driver on Sat Jun 02, 2007 8:38 am, edited 1 time in total.
The hardest thing about flying is knowing when to say no
After over a half a century of flying no one ever died because of my decision not to fly.
After over a half a century of flying no one ever died because of my decision not to fly.
Hey Woxof, I'll gladly listen to alternative investment strategies beyond RRSP's but as yet nothing that seems logical, iePika, Goose, Pay some attention to the voices of experience.
has been presented from the so called voices of reason. Based on what has been presented here so far I think RRSP's are still the winner. However, when credible alternatives I presented I'd be glad to explore them.If the taxman asks you to show proof of income what you do is calmy tell him you live off those government scratch and win tickets.
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Cat Driver
- Top Poster
- Posts: 18921
- Joined: Sun Feb 15, 2004 8:31 pm
So Pika you can't see the logic in what I told them I live off of?
What better means of making money could you give to a government tax collector than telling them that you have been taking advantage of their scratch and win tickets?
What are they going to say, no that is impossible because the scratch and wins are set up to make money for the government and it is impossible for anyone except government to make money with them?
And as far as making money goes I think I have a fair idea on how that is done.....and it sure isn't with RRSP's
What better means of making money could you give to a government tax collector than telling them that you have been taking advantage of their scratch and win tickets?
What are they going to say, no that is impossible because the scratch and wins are set up to make money for the government and it is impossible for anyone except government to make money with them?
And as far as making money goes I think I have a fair idea on how that is done.....and it sure isn't with RRSP's
The hardest thing about flying is knowing when to say no
After over a half a century of flying no one ever died because of my decision not to fly.
After over a half a century of flying no one ever died because of my decision not to fly.
Pika WOX is also very correct about paying half on capital gains with properties. That is why I also have an investment property. The trick is to save up enough and have the Balls to buy one. As far as which return will make more money? The investment will kick its ass in the long run which of course means paying more tax at the end of it.
My RRSP's are my pension. Just like a pension you will pay tax on whatever you take out of your RRSP's. The main difference is I have complete control of my money at all times.
And lastly CAT, I too work oversea's and get a shit load of tax free money, hence the investment property.
My RRSP's are my pension. Just like a pension you will pay tax on whatever you take out of your RRSP's. The main difference is I have complete control of my money at all times.
And lastly CAT, I too work oversea's and get a shit load of tax free money, hence the investment property.
Whipline, I agree Investment Properties are one of the best. When you ask the bank for the cash to buy one they will want you to put 30% down but that doesn't mean you have to. I bought one with 5% down. Just keep going to different banks and eventually one will agree to give you the money but will want you to switch everything you have over to them. You say thank you then go back to your own bank tell them what you are planning and pretty soon a couple of phone calls take place and presto you have the money and never had to live through the hassle of switching accounts etc. to another bank. Of course you can always move if you so desire.
Everything is now tax deductible, property taxes, lawyer fees, interest, utilities, any maintainence costs, even trips to visit it and you can claim mileage even if you live across town.
When you dispose of said property there are even ways around paying any Capitol Gains tax but that is for another thread.
Everything is now tax deductible, property taxes, lawyer fees, interest, utilities, any maintainence costs, even trips to visit it and you can claim mileage even if you live across town.
When you dispose of said property there are even ways around paying any Capitol Gains tax but that is for another thread.
You Can Love An Airplane All You Want, But Remember, It Will Never Love You Back!
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Cat Driver
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- Joined: Sun Feb 15, 2004 8:31 pm
tax
I agree that RRSP's are a stupid thing to do for most Canadians...
Here is why:
If you put 261 $ a month in your RRSP's over 35 Years with a 10% return you will have 1,000,000 $. When you retire you want to draw a 10% income= 100 000 $/year, assuming a Marginal Tax rate of 35% you will pay 35 000$ in tax an you are left with 65,000$ (100,000-65,000)
the better alternative:
Use 261 $/month to service a non-callable, interest payment only investment loan of 46 400$, invest it over 35 years at 10%, you will have 1,300,000$.
you may or may not decide to pay back the loan, lets assume you do 1,300,000-46,400= 1,253,600$
Now on retirement you draw an income of 125,360 $ but here is the kicker, now you are on a Capital gain scenario and only 50% of that money is taxed at your marginal tax rate (62,680 X .35 = 21,938 $)
so in the investment loan scenario you end up with 103,422 $ after tax (125,360 - 21,938)
In the RRSP scenario you end up with 65,000$ after tax...
So yes, Cat and Hedley are right, when you know better, you do better...
Oh by the way, RRSP's are a tax deduction, so are the interest paid on and investment loan!
Every time you borow money to invest, the interest paid on that money is a tax deduction!
So yes, RRSP's are not the smartest thing to do!
If you want to know more about that kind of strategies, come by at my "money seminar" every wednesday at 7:30 PM in Winnipeg at the WFG office on 3140 portage av
If you are really serious about becoming tax efficient read the book "the 10 secrets revenue Canada doesn't want you to know" by David M. Voth
cheers
Here is why:
If you put 261 $ a month in your RRSP's over 35 Years with a 10% return you will have 1,000,000 $. When you retire you want to draw a 10% income= 100 000 $/year, assuming a Marginal Tax rate of 35% you will pay 35 000$ in tax an you are left with 65,000$ (100,000-65,000)
the better alternative:
Use 261 $/month to service a non-callable, interest payment only investment loan of 46 400$, invest it over 35 years at 10%, you will have 1,300,000$.
you may or may not decide to pay back the loan, lets assume you do 1,300,000-46,400= 1,253,600$
Now on retirement you draw an income of 125,360 $ but here is the kicker, now you are on a Capital gain scenario and only 50% of that money is taxed at your marginal tax rate (62,680 X .35 = 21,938 $)
so in the investment loan scenario you end up with 103,422 $ after tax (125,360 - 21,938)
In the RRSP scenario you end up with 65,000$ after tax...
So yes, Cat and Hedley are right, when you know better, you do better...
Oh by the way, RRSP's are a tax deduction, so are the interest paid on and investment loan!
Every time you borow money to invest, the interest paid on that money is a tax deduction!
So yes, RRSP's are not the smartest thing to do!
If you want to know more about that kind of strategies, come by at my "money seminar" every wednesday at 7:30 PM in Winnipeg at the WFG office on 3140 portage av
If you are really serious about becoming tax efficient read the book "the 10 secrets revenue Canada doesn't want you to know" by David M. Voth
cheers
Go west young men, go west...
Here's secret number one from Voth's book.
Secret 1
Take Maximum Advantage Of Your RRSP
An RRSP is by far the best tax break you will find. The book does not discuss the details but does highlight a few lesser known tips and strategies.
Contribute as early in the year as possible. If you contribute at the start of the year, all of the income earned will accumulate TAX-FREE. The effect of early contributions over a few years will be incredible (just watch the RRSPcompany advertising over the next six weeks and you will get all the detailed examples you need!)
Contribute anyway. If you have money to make a contribution, but don't want to claim the deduction in the current year because you are already in a low income position, make the contribution but delay the deduction. You can claim the deduction in a later year. This way, if you know your income will be higher in future years, you can maximize the TAX-FREE growth of your money now while maximizing your tax savings later.
Put your interest earning investments into your RRSP. If your portfolio consists of investments that earn interest such as GICs and bonds, and investments that earn capital gains and dividends such as growth mutual funds, consider putting your interest earning investments in your RRSP. This reduces your tax because until you sell your investment fund shares you will not have to pay much tax on their annual income. But interest income is taxed at your highest rate of tax, annually. NOTE: This does not mean that your RRSP should not own growth investments, only that if you have interest bearing investments outside your RRSP, this is one very good way of sheltering them. Transfer your retiring allowance or severance pay to your RRSP. The RRSP deadline is 60 days into the next tax year (March 1st for regular years and February 29th in a leap year). Your limit is based on 18% of your prior year "earned income" plus any carryforward amount. Check the notice of assessment for your prior year tax return to find out your maximum limit. If you are in a low tax bracket now, consider making a contribution now but not using it until a later year when you are in a higher bracket.
Secret 1
Take Maximum Advantage Of Your RRSP
An RRSP is by far the best tax break you will find. The book does not discuss the details but does highlight a few lesser known tips and strategies.
Contribute as early in the year as possible. If you contribute at the start of the year, all of the income earned will accumulate TAX-FREE. The effect of early contributions over a few years will be incredible (just watch the RRSPcompany advertising over the next six weeks and you will get all the detailed examples you need!)
Contribute anyway. If you have money to make a contribution, but don't want to claim the deduction in the current year because you are already in a low income position, make the contribution but delay the deduction. You can claim the deduction in a later year. This way, if you know your income will be higher in future years, you can maximize the TAX-FREE growth of your money now while maximizing your tax savings later.
Put your interest earning investments into your RRSP. If your portfolio consists of investments that earn interest such as GICs and bonds, and investments that earn capital gains and dividends such as growth mutual funds, consider putting your interest earning investments in your RRSP. This reduces your tax because until you sell your investment fund shares you will not have to pay much tax on their annual income. But interest income is taxed at your highest rate of tax, annually. NOTE: This does not mean that your RRSP should not own growth investments, only that if you have interest bearing investments outside your RRSP, this is one very good way of sheltering them. Transfer your retiring allowance or severance pay to your RRSP. The RRSP deadline is 60 days into the next tax year (March 1st for regular years and February 29th in a leap year). Your limit is based on 18% of your prior year "earned income" plus any carryforward amount. Check the notice of assessment for your prior year tax return to find out your maximum limit. If you are in a low tax bracket now, consider making a contribution now but not using it until a later year when you are in a higher bracket.
