Get the ultimate double-dip benefit from your tax refund
May 1, 2006

Managing Your Money Get the ultimate double-dip benefit from your tax refund Parents have to be terrific jugglers. You juggle time to complete all the tasks and chores that fill every day. You juggle responsibilities with your spouse to ensure your children have the best possible childhood and prospects for the future. But juggling your finances while raising a family may be the toughest act of them all. And finding extra dollars to invest for a comfortable financial future, and for your retirement, can be even more difficult. If you’re the parent of younger children, you are probably facing this question right now: Is it better to first save for retirement through Registered Retirement Savings Plans (RRSPs), or to save for my children’s education through Registered Education Savings Plans (RESPs)? Fret no more because here’s how you can do both: Make your RRSP contribution before February 28, 2007 and use the resulting tax refund to make an RESP contribution. That’s the ultimate double-dip because your child’s RESP can take advantage of free cash from the federal government in the form of a Canada Education Savings Grant* at the same time. Here’s why the ultimate double-dip works so well: · When you make your maximum allowable RRSP contribution by the 2007 deadline, you will enjoy an immediate tax-savings on your total contribution that you can apply to your children’s RESPs. · In 1998, the federal government introduced the Canada Education Savings Grant (CES Grant) program that provides each eligible child with an additional 20% in free grant money on the first $2,000 of an annual RESP contribution to a maximum of $400 per year. Even if you were unable to make enough of an RESP contribution to access the CES Grant money in previous years, you can make up for it this year (or in future years) and get the grant money your child would have received in those earlier years. · More recently, the government made an Additional CES Grant available (on RESP contributions made after January 1, 2005) that could add up to another $100 a year in free grant money. You can access the additional CES Grant* if your household income is under $72,000 but if you don’t apply, the grant “room” does not carry forward. · Alberta provides up to $800 for each child through the Alberta Centennial Education Plan (ACES)**. · And the Canadian Learning Bond* of up to $2,000 per child is available to Canadians who receive the National Child Benefit Supplement. The 2007 RRSP contribution deadline might seem like a long way off – but with all the daily juggling going on in your life, it has a way of sneaking up on you. So why not start now to set aside as much as you can each month – that way you’ll have the cash on hand when you need it to make your maximum RRSP contribution. Plus your child’s RESP will have that extra money compounding away on a tax-deferred basis for faster and stronger growth over the long term. It’s a win-win situation that will allow you to also capitalize on the ultimate double-dip. That makes it a win-win-win situation! Your financial advisor can help you juggle less and feel more confident about your future – plus make sure you take full advantage of all the tax-saving, income-building opportunities available to you. *Canada Education Savings Grant and Canada Learning Bond are sponsored by Human Resources and Skills Development Canada. **The Alberta Centennial Education Savings Grant is sponsored by the Government of Alberta. This column, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant.