Path: utzoo!ncc!alberta!watmath!utgpu!bnr-vpa!bnr-rsc!jim
From: jim@bnr-rsc.UUCP (Jim Somerville)
Newsgroups: can.general
Subject: Re: income tax tips #13: RRSPs
Message-ID: <633@bnr-rsc.UUCP>
Date: 7 Mar 88 16:12:54 GMT
References: <15561@onfcanim.UUCP> <1988Mar5.234438.29977@lsuc.uucp>
Reply-To: jim@bnr-rsc.UUCP (Jim Somerville)
Distribution: can
Organization: Bell-Northern Research, Ottawa, Canada
Lines: 18


I have heard of something called "overcontributing" to your RRSP.
Let's say that your contribution limit is $3500.  You can still put
$5500 in your RRSP, but you are only allowed the $3500 deduction.  So you
end up paying tax on the extra $2000 TWICE.  Once this year, and once
when you withdraw it from the RRSP.  But if you allow that $2000 to grow
tax-free for approx. 15+ years, the tax free growth makes the extra taxation
on the $2000 negligible.  The only catch is that you have to leave it in
for 10-15 years (somewhere in that time frame depending on your rate of
return) for the overcontributing to be worth it.

Would somebody in the know please comment on this.  Is this scheme
legitimate?  Does anyone out there actually do this?

-- 
Jim Somerville (bnr-vpa!bnr-rsc!jim)	Phone:	(613) 763-4497
Bell-Northern Research			Usenet:utgpu!bnr-vpa!bnr-rsc!jim
P.O. Box 3511, Station C, Ottawa, Ontario, Canada, K1Y 4H7