The most popular tax tool available to taxpayers is investing in a registered retirement saving plan (RRSP).
Contributions to RRSP’s are tax deductible and the income earned within the plan grows tax deferred until retirement. You can claim a contribution of up to 18% of 2015 earned income to a maximum of $25,370. Earned income is defined as income from employment, from business, net rental income from real estate, CPP disability pension, certain types of royalty, and spousal or child support payments that are included in your income. The contribution limit may be subject to the year 2015 pension adjustment reversals. Pension adjustments reflect, in most cases, your employer’s contributions to a pension plan or actuarial commitments to such plans in the year 2015. The age limit for contributing to an RRSP is 71. The age limit for converting an RRSP to an annuity or RRIF is also 71.
Don’t over-contribute; a severe penalty will be the result.