Investing

RSP loan and Child Tax Benefit (CCB)

  • Last Updated:
  • Feb 8th, 2021 4:26 pm
[OP]
Jr. Member
Aug 6, 2008
179 posts
232 upvotes

RSP loan and Child Tax Benefit (CCB)

So, RSP loans are 1.49% at Tangerine. Heck, a HELOC is 2.35%. If you borrow and then put into RRSP to lower your taxable income, that's an additional 3.2% increase to your Canada Child Benefit (CCB), assuming you have only one child.

So borrow the money, pay 1.49% interest, put in RRSP, leave it in cash if you want to, then collect 3.2% return on CCB (higher if you have more than 1 kid). Free money?
2 replies
Deal Expert
User avatar
Dec 12, 2009
24018 posts
13306 upvotes
Toronto
The CCB is a one off 3.2% whereas the 1.49% borrowing costs is perpetual until the loan is paid off. If the loan can be retired within the year so that a rinse and repeat strategy can be deployed, then there is a small gain. Are there any other loans outstanding with interest rate higher than 3.2%. If so, working off those loans would be better than chasing CCB.
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Member
Dec 11, 2013
450 posts
359 upvotes
Vancouver Island
Yeah that works to pull your lowered income a year forward. Also look for that other RFD thread where people withdraw a large portion from their TFSA, deposit into RRSP, deposit tax refund and enlarged CCB payments into TFSA. Can do this periodically to suit your rrsp contribution room.

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