Big tax bill
Question – I need your help.
I am on a pension of around $70,000 plus CPP. I just retired and had a payout in 2018. I’m doing my taxes and as of now will be paying around $6,000. My question is should I get a spousal RRSP to defer the taxes or just pay them now and get it over with? Looking forward to your response. – M.H.
Answer – a spousal RRSP makes sense.
The one-time payout clearly puts you into a higher tax bracket so contributing to a spousal RRSP makes sense if it appears your spouse will have a lower marginal rate in the future. You’ll earn a refund now at the higher tax level, but your spouse will presumably pay tax at a lower rate when the money comes out. In the meantime, the contribution will earn tax-sheltered income. But you need to move quickly. The deadline for contributions for the 2018 tax year is March 1. – G.P.