LINING UP AT THE BANK TONITE?

There may be long line ups at your bank today, as people who have procrastinated step up to purchase RRSP instruments from their bank. The deadline is actually March 1, but old habits die hard, especially the habit of leaving things to the very last minute.

Hopefully by today you have decided 1, whether an RRSP is a good idea for you, 2,what is the maximum amount you can deposit in your RRSP this tax year, and 3, what sort of way you are going to pay for your RRSP.

Your Notice of Assesment from last year's tax return will tell you how much you can put into your RRSP this year, it is based on how much money you EARNED last year. YOu can also telephone Revenue Canada and have them look it up for you, but today you will probbaly only get busy signals all day.If you only had dividend income or you inherited a pile of money, you don't have any earned income, and therefore your RRSP limit will be zero. People who run their businesses through a Corporation will not have any PERSONAL earned income.

All is not lost, as you may have RRSP room from previous years, or if you are really gung-ho for an RRSP, you can contribute up to $2000.00 over your limit without penalty. BUT, you will not get a tax deduction for the contribution.

Banks are falling over themselves to lend you money for an RRSP cotribution. The standard rate is about one percent LESS than the prime rate the bank charges. So it's a bargain to borrow the money, but the loan is restricted to RRSP purchases, you cant use it to pay other bills.

All of the above is predicated on the concept of actually HAVING an RRSP. Which may or may not be a good thing. Some people's tax rates make a RRSP a poor investment. Other people may find alternative ways to invest spare money. Unfortunately many people don't have spare money, as they are busy paying down their credit cards. Your mileage may vary.