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Old 09-14-2006, 08:49 PM   #1
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Default Anyone on this Forum an Accountant or a Banker [b]in Canada[

I have a question to ask related to RSP'*......keep in mind It'* not a simple question.
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Old 09-15-2006, 12:10 AM   #2
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Default Re: Anyone on this Forum an Accountant or a Banker [b]in Can

Quote:
Originally Posted by Maymybonneliveforever
I have a question to ask related to RSP'*......keep in mind It'* not a simple question.
Fire away...

Cheers,
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Old 09-15-2006, 06:00 AM   #3
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US reporting for duty!!!

What'* an RSVP? lol
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Old 09-15-2006, 03:01 PM   #4
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Thanks folks, maybe this should be answered via PM'* but my question is as follows.

1. A RRSP contribution is based on a percentage of earned income ....Correct?
2. If so, then how is my neighbour who is retired at the age of 55 contributing appromately 18% to his RRSP, based on either interest earned or Dividends earned from Mutual Funds? In other words investments. I was under the understanding that RRSP'* are based on earned income not investment income. When I asked him about it, he told me his chartered bank set it up for him.........How can they do that. This is totaly seperate from his wifes RRSP'*.
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Old 09-15-2006, 03:39 PM   #5
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Quote:
Originally Posted by Maymybonneliveforever
Thanks folks, maybe this should be answered via PM'* but my question is as follows.

1. A RRSP contribution is based on a percentage of earned income ....Correct?
2. If so, then how is my neighbour who is retired at the age of 55 contributing appromately 18% to his RRSP, based on either interest earned or Dividends earned from Mutual Funds? In other words investments. I was under the understanding that RRSP'* are based on earned income not investment income. When I asked him about it, he told me his chartered bank set it up for him.........How can they do that. This is totaly seperate from his wifes RRSP'*.

1) Yes it is.

2) Are you sure you know all the facts about his situation? What if it'* past contribution room or a contribution based on the prvious years earnings? Generally, interest income and dividends are classed as investment income.

There could be other circumstances that would allow him to make contributions, such as;

RRSP deduction limit – This refers to the maximum amount you can deduct from contributions you made to your RRSPs or to a spousal or common-law partner RRSP for a year. The calculation is based, in part, on your previous year earned income (excluding transfers to your RRSPs of certain types of qualifying income). Pension adjustments (PAs), past service pension adjustments (PSPAs), pension adjustment reversals (PARs), and your unused RRSP deduction room, are also used to calculate the limit.

If income that was something other than earned were somehow converted into earned income, then he would also face a tax liability for this amount which would offset his contribution deduction rendering the transaction tax ineffective.

In my experience it'* quite rare for people to disclose fully their financial circumstances, especially to neighbours. I would guess there'* more to this than you know of.

Cheers,
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Old 09-15-2006, 03:53 PM   #6
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Thanks for the reply Foghorn, the only other info I can provide is that both him and his wife max out there RRSP'* every year so this amount is not something that is carried forward. In his own words, " My bank set it up this way so I could contribute to RRSP'* every years." How the heck is that possible. I can understand if you would want to defraud Revenue Canada, but a Major Chartered Bank? This RRSP contribution is a yearly contribution, as far as I know this is the 3rd year he'* done it. I would be confortable in saying that I know approximatly 60% of his true financial state but posting it wouldn't be benificial.


I have lost sleep over trying to figure this out.
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Old 09-15-2006, 04:35 PM   #7
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Quote:
Originally Posted by Maymybonneliveforever
I have lost sleep over trying to figure this out.
So ask him for a referal to the bank so that you can benefit too...

I remember someone else once mentioning this kind of thing to me too, can't remember any details.

Still, I work for a subsidiary of a Schedule 1 Charterred Bank, we don't offer any thing of the kind despite the fact we have many multiples of the products available at a branch.

Cheers,
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Old 09-15-2006, 09:22 PM   #8
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Quote:
Originally Posted by Foghorn
Quote:
Originally Posted by Maymybonneliveforever
I have lost sleep over trying to figure this out.
So ask him for a referal to the bank so that you can benefit too...

I remember someone else once mentioning this kind of thing to me too, can't remember any details.

Still, I work for a subsidiary of a Schedule 1 Charterred Bank, we don't offer any thing of the kind despite the fact we have many multiples of the products available at a branch.

Cheers,
I think I may have to go for a few liquid libations before I can try to ask. I kind of sounds like it'* not on the up and up, but why would the bank set it up for him if it wasn't?
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Old 09-16-2006, 11:10 AM   #9
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I don't know if this will help being down in the US et al, but my mom'* early retirement payemnts were considered earned income until she reached the official retirment age 65 last year. She didn't make enough in retirement to owe taxes but it being classified as earned income got her a good return every year and let her throw money into IRA'*.

He might be in a simular situation using his retirement as the basis for the % he can drop into his RRSP, simular to my moms IRA.
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