# Tax deferred investment/savings options?



## Tornbysaber (Nov 25, 2012)

Recently I read a blog that listed out all sorts of oppourtunities to reduce taxable income in USA resulting in a crazy tax rate : 0.1% federal income on a 150,000 income.

These are some of the things he listed as tax deferred investments options he had:
■Retirement plan contributions (401k, 457 or 403b plans)
■Pension contributions
■Employee Stock Purchase Plans
■Employee Stock Ownership Plans
■Health Insurance
■Dental Insurance
■Flexible Spending Accounts (for health/dental or child care)
■Health Savings Account

Do we have anything other than the RRSP ?


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## Eclectic12 (Oct 20, 2010)

I don't think there's any way to get down to a similar crazy tax rate (assuming this is true for the US) but some of the items you've listed do reduce a Canadian's taxable income.

The RRSP is similar to a 401K.

Pension contributions are tax deferred. Most people are not aware of the income reduction as the company they work for does not include the contributions in the taxable income line of their T4 so there isn't the visible tax refund that most people are used to for an RRSP contribution.

I haven't been fortunate enough to have a stock plan so I can't comment without researching.

Contributions to a TFSA will reduce investment income (capital gains, dividends and interest).


Cheers


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## Tornbysaber (Nov 25, 2012)

oh, I didnt know about the pension, now I am even more jealous because I dont have a pension !! :tongue-new:

I've heard that buying life/health insurance also works in Canada, but I am not sure.


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## Spudd (Oct 11, 2011)

ESPP's don't give any tax benefit as far as I know. We have one at my company, and the company match actually counts as taxable income which increases my taxes rather than reducing.


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## stardancer (Apr 26, 2009)

Tornbysaber said:


> oh, I didnt know about the pension, now I am even more jealous because I dont have a pension !! :tongue-new:
> 
> I've heard that buying life/health insurance also works in Canada, but I am not sure.


Premiums paid to a private health and/or dental plan counts as medical expenses on schedule 1 in Canada.


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## Eclectic12 (Oct 20, 2010)

Tornbysaber said:


> oh, I didn't know about the pension, now I am even more jealous because I don't have a pension !! :tongue-new: ...


There's really nothing to be jealous of in terms of the employee contributions being tax deferred ... contributing cash to an RRSP will get you the same reduction in taxable income.


The parts to be jealous of are:

a) the employer contributions to a DC pension.

b) the employer guaranteed payout of the DB pension.


Bear in mind that the Pension Adjustment (PA) that a pension will generate is reducing the pensioner's RRSP contribution room, which roughly levels the playing field with those who don't have a pension.


Cheers


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## Tornbysaber (Nov 25, 2012)

@eclectic12, yes, totally agree.


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## Guban (Jul 5, 2011)

OP, I assume that your TFSA's are both maxed out. Growth on money in a TFSA is really tax free. As eclectic pointed out the RRSP is just tax deferred. Another advantage is that you can always pull money out of the TFSA and contribute it into the RRSP when your wife is in a higher tax bracket.


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## OptsyEagle (Nov 29, 2009)

We have all of them. Good luck trying to get your tax rate that low. Nobody will legally be able to do that, with just those programs, even in the United States.


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