Discover and read the best of Twitter Threads about #rrsp

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Most employees don't really know why they get a tax refund when they add to an RRSP.

They understand that they do get one, and that it's "good" but really they don't understand the mechanics.

It's actually so simple.

🧵
Your employer is estimating how much tax you'll owe based on how much they're paying you.

If you add to a personal RRSP, your employer doesn't account for that in their estimate.

When you put money into an RRSP, the CRA won’t charge you income tax on the amount you put in.
If your employer estimated that you'd owe money on that, they paid that amount to CRA on your behalf.

This is your "withholding tax". It's meant to ensure CRA gets their due.

Withholding tax is just an advance payment of your annual income tax.
Read 6 tweets
Canada’s new #FHSA has different kinds. US citizens resident in Canada should avoid those administered by trustee (possibly creating foreign trust for US tax purposes). Stick with the basic “bank account” FHSA with no trustee and no (#PFIC) mutual funds. canada.ca/en/revenue-age…
General features of Canada’s new #FHSA: max contribution $8000 per year and $40,000 lifetime. Contributions tax deductible. Growth in plan not taxable. Distribution not taxable if used to buy first home. US citizens in Canada will need special planning. canada.ca/en/revenue-age…
A ”self-directed” #FHSA is possible which does NOT appear to be a “trust”. This would be good for US citizens (and all CDN residents) who want to invest in individual stocks. US citizens must avoid CDN mutual funds. canada.ca/en/revenue-age…
Read 6 tweets

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