The goal of an RRSP is to save for your retirement, accessing the funds when you will be in a lower tax bracket.  Depending on your age and other income at retirement, it is usually beneficial to contribute 10 – 20% of your taxable income.  To determine the amount that will achieve your financial goals, make an appointment with your financial planner.

Before you contribute to your RRSP check your contribution limit using Quick Access on the CRA website or your 2008 Notice of Assessment. Watch that you don't over contribute - CRA has started to impose penalties on excess over contributions.

To use Quick Access, CRA requires that you provide your:

Still have questions about RRSPs? For the latest information, consult the CRA website.

Open a Tax Free Savings Account (TFSA) to save for anything you want – a car, a vacation, a wedding…  Most of us have a rainy day fund – for the unexpected things in life – a TFSA is the perfect account for this type of savings.  If you are 18 or older, you can contribute up to $5,000 per year. The funds can be withdrawn and re-contributed without tax penalty.  The contributions won’t lower your taxes but the income earned in the TFSA isn’t taxable either.  If you don’t have enough to put into the TFSA now, don’t worry, the unused room will be carried forward.

There is a very easy way to avoid paying penalties to Canada Revenue Agency – File on Time.  Late filing penalties start at 5% of the balance owing; then for every month you procrastinate an additional 1% is added, to a maximum of 12 months.  If filing late is a way of life for you (late in any one of the three preceding years), then the penalties increase to 10% of the balance owing plus 2% per month to a maximum of 20 months.  Of course when you owe money to the government penalties are only one part of the extra costs you will face, interest is also charged at the prescribed rate – set quarterly.

Tax Tip – File on time, even if you can’t pay the balance owing.

In most cases if you are an employee, investor, or retiree your personal income tax return is due April 30.  Since this is a Saturday in 2011, there is a grace period until May 2 (the first business day after April 30).  However if you, or your spouse, has self-employment income in the year, your tax return is not due until June 15.  Although you can delay filing, the balance owing is still due April 30 (May 2) so be sure to pay an estimate of your tax bill by then.