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Path: utzoo!utcsrgv!dave
From: dave@utcsrgv.UUCP (Dave Sherman)
Newsgroups: can.general,net.taxes
Subject: Re: Cdn RRSP for income averaging
Message-ID: <3417@utcsrgv.UUCP>
Date: Fri, 2-Mar-84 08:00:40 EST
Article-I.D.: utcsrgv.3417
Posted: Fri Mar  2 08:00:40 1984
Date-Received: Fri, 2-Mar-84 22:03:20 EST
References: <3415@utcsrgv.UUCP>
Organization: The Law Society of Upper Canada, Toronto
Lines: 33

~| From: peterr@utcsrgv.UUCP (Peter Rowley)
~| A friend of mine told me that he borrowed money from the bank to buy a $2500
~| RRSP and then immediately sell it, transferring the income from the '83 tax
~| year to the '84 tax year.  This cost about $90.  Why should the banks be
~| allowed to make money this way, when it should be trivial to do this sort
~| of ad hoc income averaging on the tax form?

(For you non-Canadians, an RRSP is a Registered Retirement Savings Plan,
something like the American IRA.)

The RRSP isn't *designed* for averaging over two years in this way.
It happens to work that way because they've left it flexible enough
that you can contribute on Feb. 29/84, claim your deduction for
1983, and collapse it immediately with the income coming into 1984.
While your friend is perfectly in order to (mis)use the RRSP to
effect averaging (remember, the second letter in RRSP stands for
"retirement"!), he really shouldn't complain when it costs a little bit.
If the fees are too high, he shouldn't use it for other than what it was
designed for.

Anyway, "the banks" is rather a wide term, isn't it? Did your friend
shop around? My wife was considering doing the same thing, since her
1984 income will be lower than 1983 (after the baby comes). She phoned
all the banks and found that Toronto-Dominion had no fees for this
kind of transaction, although the RRSP had to be left open for a week.
(We ended up not doing this, since we could reduce our taxes to zero
with R&D shares instead.)

Dave Sherman
Toronto
utcsrgv!dave
-- 
 {allegra,cornell,decvax,ihnp4,linus,utzoo}!utcsrgv!dave