Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10 5/3/83; site utcsrgv.UUCP 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