[corpfan1]

Why not to invest in an RRSP...yet...


4. If you might be in a higher tax bracket in the near future, an RRSP contribution works as a tax deduction against your income. Any deduction saves you money in tax equal to whatever your marginal tax rate is. For example, in 2004, Betty earned $33,000. She expects that her income in 2005 will rise to $38,000 because she is working in a new job. The tax bracket cutoff (where you move from one bracket to another) is $35,000. If Betty claims a $1,000 contribution in 2004, the deduction will be worth 25 per cent. If she waits until 2005 to claim the contribution, she will save 31 per cent in taxes (because she is in a higher tax bracket).