I finally got my T4 (yay!) and started doing my tax return. I’ll likely file with an accounting software I have access to but I started by playing around with H&R Block’s online tax software. Now I was interviewed a couple weeks ago about my RRSP and the CA that was also in the interview stated his knowledge on RRSP’s and TFSA’s. I have about $3,000 in RRSP contributions and my plan was to defer all of them till years when I am making more money. But, as I was playing around with my return I noticed that in claiming my RRSP deductions I would get $600 more back this year.
But then I think I’m being greedy.
For you see if I wait till I am in a higher income bracket I will get a larger return.
(taken from the CRA website)
Alberta currently has a tax rate of 10% so right now and so I’m being taxed about 25%. Which if I claimed my $3,000′s worth of credit I should decrease what I owe or increase what I get as a refund by $750. But, if I wait till I’m in the 39% bracket I’ll get back $1,170. (These numbers won’t be exact because of the progressive tax rate)
This would mean growing my money by 150%! That’s better than any index fund I could buy.
I know there is always the inflation argument but I really hope that by the time I’m making $135,000 our dollar hasn’t doubled. Then of course there is the argument – what if I never make $135,000. In my mind though it isn’t a question of if it is a question of when… but that’s cocky so I’ll say that if I don’t then I’ll still be in a higher income bracket than I am now and will get more of a return.
What would you do? Claim the deduction or wait?