• Registered Retirement Savings Plan (RRSP)
  • Registered Education Savings Plans (RESP)
  • Registered Retirement Income Fund (RRIF)
  • Fonds d'épargne action (REA)
  • Régime d'investissement coopératif (RIC)
  • Quebec Business Investment Company (QBIC)

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    Registered Retirement Savings Plan (RRSP)

    Well known and by far the most popular of the tax shelters, it is usually unwise to look for another kind of tax shelter if this one is not used to its maximum.

    Characteristics :

  • Full deduction in the contributor's income tax return;
  • Maximum contributions (to know what your is, call T.I.P.S.);
  • Carry forward of the unused contributions;
  • Possibility to contribute to a spousal RRSP (inquire about impact on withdrawals by the spouse);
  • Possibility of withdrawal to buy a home;
  • Possibility of withdrawal to cover tuition fees for the contributor and/or spouse;
  • The age limit is set at 69;
  • At 69, possibility to contribute to a spousal RRSP until the end of the year in which the spouse turns 69.

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    Registered Education Savings Plans (RESP)

    A fund that was not too popular until the budget of 1998, when the Federal Government announced a grant towards education savings (CESG).

    Characteristics :

  • The contribution is not deductible but the return is a tax shelter (taxable for the student upon withdrawal);
  • The beneficiary is the child who will withdraw the money when a student at the post-secondary level;
  • The Government of Canada will pay up to 20% on the first $2,000 in annual contribution made per child up to $400 per child per year;
  • Possibility to carry forward the unused rights ($2,000.00 per year) from year to year;
  • Maximum contribution of $4,000 per year per individual and a total of $42,000 per beneficiary.

    • Tax tip :
    Even though you do not have the money to deposit in such a fund, it is recommended to open a RESPs at the birth of the child in order to cumulate his rights in the fund. In so doing, when you are able to contribute, you will be entitled to double the eligible amount. If the child is not registered at birth you will not be able to cumulate his rights from one year to another.


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    Registered Retirement Income Fund (RRIF)

    In general, taxpayers over 69 years of age use this fund. Like an RRSP, it allows taxpayers to accumulate income tax-free. Minimum annual withdrawals are mandatory according to a withdrawal scale that takes into consideration the age and the assets of the individual at the beginning of the year.


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    Fonds d'épargne action (REA) Quebec income tax return only

    This fund allows taxpayers to deduct the value of shares in a company that is eligible to such fund. The deductible amount must not exceed 10% of the individual's total income for the year.


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    Régime d'investissement coopératif (RIC) Quebec income tax return only

    This fund allows taxpayers to deduct between 100% and 150% of the cost of shares in a cooperative eligible to such fund. The deductible amount must not exceed 10% of the individual's total income for the year. The portion that is not eligible can be carried forward over the following five years.


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    Quebec Business Investment Company (QBIC) Quebec income tax return only
    QBIC web site

    This plan allows taxpayers to deduct 150% of the share value in a QBIC that was thereafter

    Characteristics :

  • The shareholder has to be an individual;
  • The QBIC had to have a minimum of $50,000.00;
  • The eligible company and the QBIC cannot be controlled by the same individual or the same group of individuals;
  • The deduction is limited to 30% of the individual's total revenue. The unused deductions can be carried forward to five subsequent years;
  • Possibility to combine QBIC and RRSP. The RRSP deduction is eligible at both levels of government.

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