Buy more RRSP to get more CCB?
Is there any kind of calculator out there or article which talks about the benefits of contributing more RRSP in order to receive more CCB? (Child Card Benefits).
Thanks in advance!
Feb 9th, 2017 1:17 pm
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Feb 10th, 2017 7:37 pm
Did you include the income tax refund you would get back from your RRSP contributions in your 5.7?Bullseye wrote: ↑At our income levels with 2 kids, our $40k in RRSP contributions for 2016 will get us an extra $2,280 in CTB for July 2017-June 2018 period. That's an extra 5.7% on each dollar we contribute, pretty decent. Then we also put all that CTB into RESP's, so 20% free on top of that.
The general rule of thumb that lower income people shouldn't contribute to RRSP's is not as useful if you have children, especially if you have a few of them, and especially if you are very low income. The benefits really start increasing when you get below $70k family income. This article is outdated, but the concepts are still useful - https://www.canadianmoneysaver.ca/how-t ... x-benefit/
You can also use RRSP's to get yourself out of an Ontario Health Tax bracket, and to increase an HST refund.
For seniors, another very illuminating article on the unintended effects of our tax and benefit system is here - http://www.milliondollarjourney.com/tfs ... eniors.htm
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Feb 11th, 2017 11:34 am
Wow renoldman...this is EXACTLY what I needed...thank you so much! really appreciate it!renoldman wrote: ↑ Even more math. (For BC ... because OP is from BC)
http://www.taxtips.ca/calculators/basic ... ulator.htm
I don't know your exact amount ... so will just use an even $90,000 -
$90,000 of employment income in 2016 brings $20,073 in taxes
$70,000 of employment income in 2016 brings $14,012 in taxes
$50,000 of employment income in 2016 brings $8,372 in taxes
$90,000 of employment income in 2017 brings $19,920 in taxes
$70,000 of employment income in 2017 brings $13,926 in taxes
$50,000 of employment income in 2017 brings $8,286 in taxes
So, from a baseline of $39,993 taxes owed (that is $90K both years ... no deductions)
Contributing $20,000 this year and $20,000 next year: $ 12,055 ($27,938 owing)
Contributing $40,000 this year and $0 next year: $11,701 ($28,292 owing)
What this means is that you will lose $354 by contributing $40,000 in 2016 and $0 in 2017 compared to contributing $20,000 in each year.
So, this would bring the $1,170 difference (same for both above) down to $816
Comparing the difference between the 2 possibilities listed above:
2 Kids Under 6: 5.2% difference (compared to 7.5% above)
2 Kids Over 6: 7.0% (compared to 10.1% above)
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