I expect to pay $8,000 in income tax this year. Can I make that $0 if I contribute $8,000 to my RRSP?
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Our response:
While we try to provide general information to help you get started, we are not able to provide advice.
When you make a contribution to your Registered Retirement Savings Plan (RRSP), the contribution amount is deducted from your overall taxable income for that year – the basis for calculating the income taxes you owe. For example, if you earned income of $50,000 and contributed $8,000 to your RRSP, you will only be taxed on an income of $42,000. The immediate savings to your income tax will depend on your income tax bracket. You can find the federal and provincial income tax brackets from the Canada Revenue Agency.
A registered financial advisor or tax professional can help you in handling your income taxes and can help you determine what will work best specific to your financial goals and personal financial needs.