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spousal RRSP (Canada)

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Definition of spousal RRSP (Canada)

Spousal RRSP (Canada) Image 1

spousal RRSP (Canada)

The rrsp rules allow you to contribute to an rrsp for your spouse and claim the deduction yourself. Your total contribution (to your own and your spouse's plan) is still subject to your normal contribution limits, minus any personal pension adjustment and any past service pension adjustment, plus any unused contribution room from prior years and any pension adjustment reversal. Generally, the advantage is that your spouse will ultimately be the one who reports the income for tax purposes when the funds are withdrawn on retirement or otherwise (certain restrictions apply). If your spouse will have a lower income than you when the funds are withdrawn, significantly lower taxes may be payable on the withdrawn amount.



Related Terms:

Canada Pension Plan (CPP)

A plan that provides retirement and long term disability income benefits to residents of Canadian provinces (excluding Quebec).


Canada Savings Bonds

A bond issued each year by the federal government. These bonds can be cashed in at any time for their full face value.


qualified investments (Canada)

Qualified investments is the term used for investments that can be held in an RSP. These investments generally include:
Canadian dollar savings accounts, guaranteed investment certificates, term deposits
shares of Canadian and foreign companies listed on a prescribed stock exchange
shares of some over-the-counter U.S. and Canadian companies
shares of some small businesses
certain types of bonds and money-market investments such as treasury bills, canada Savings Bonds, Government of canada bonds, provincial government bonds, Crown Corporation bonds, bonds issued by Canadian corporations listed on a prescribed stock exchange, and certain strip bonds
certain types of mortgages, including your own
certain covered call options, warrants and rights
certain mutual funds


Registered Retirement Income Fund (Canada)

Commonly referred to as a RRIF, this is one of the options available to rrsp holders to convert their tax sheltered savings into taxable income.


Registered Retirement Savings Plan (Canada)

Commonly referred to as an rrsp, this is a tax sheltered and tax deferred savings plan recognized by the Federal and Provincial tax authorities, whereby deposits are fully tax deductable in the year of deposit and fully taxable in the year of receipt. The ability to defer taxes on rrsp earnings allows one to save much faster than is ordinarily possible. The new rules which apply to rrsp's are that the holder of such a plan must convert it into income by the end of the year in which the holder turns age 69. The choices for conversion are to simply cash it in an pay full tax in the year of receipt, convert it to a RRIF and take a varying stream of income, paying tax on the amount received annually until the income is exhausted, or converting it into an annuity with guaranteed payments for a chosen number of years, again paying tax each year on moneys received.
If you are currently 69 years of age, you may still contribute to your own rrsp until December 31st of this year and realize a tax deduction on this year's income. You must also, however, make provisions before December 31st of the year for converting your rrsp into either a RRIF or an annuity, otherwise, the full balance of your rrsp becomes taxable on January 1 of the following year. If you are older than age 69, still have earned income, and have a younger spouse, you may continue to contribute to a spousal rrsp until that spouse reaches 69 years of age. Contributions would be based on your own contribution level and are deducted from your taxable income.



RRSP

Registered Retirement Savings Plan - A plan enabling Canadian citizens to establish tax-sheltered accounts to accumulate money towards retirement.


RRSP (Registered Retirement Savings Plan) (Canada)

A savings plan registered with Revenue canada, which allows you to set aside a portion of your earned income now for use in the future. When you contribute to your rrsp, you are eligible to claim a tax deduction. However, cashing rrsps at a later date will result in the payment of tax.


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Society of Management Accountants of Canada

the professional body representing an influential and diverse
group of Certified Management Accountants; this body produces
numerous publications that address business management issues


Spousal Registered Retirement Savings Plan

This is an rrsp owned by the spouse of the person contributing to it. The contributor can direct up to 100% of eligible rrsp deposits into a spousal rrsp each and every year. Contributing to a spouses rrsp reduces the amount one can contribute to one's own rrsp, however, if the spouse is a lower income earner, it is an excellent way in which to split income for lower taxation in retirement years.



 

 

 

 

 

 

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