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Originally Posted by darklord700
I have a RRSP and a TFSA account and I have stocks in both of them. I focus on dividend paying stocks, Royal Bank, BCE etc. Naturally, the dividend tax credits are lost for stocks held inside RRSP. So how can I avoid that?
I won’t have money left over to invest in a non-registered account after maxing out my RRSP, TFSA, RESP and paying down my mortgage and car loan.
I already hold only stocks in TFSA and since the TFSA balance is much smaller than RRSP, I can’t load up TFSA with stocks anymore.
I don’t want to invest in low paying GIC only in my RRSP and I want to keep aggressively investing in high quality dividend paying stocks for growth.
My only conclusion is to enjoy the capital appreciation of the stocks inside my RRSP and forget about the loss of dividend tax credits. Do you think there’re other ways to improve my aggressive investment strategy? Thanks.
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Well the short answer is there isn't much you can do about it. You either shelter the growth in an RRSP or don't and get the dividend tax credit for the dividends.
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Originally Posted by mrkajz44
There is no magic answer of course. The one thing many people seem to overlook on RRSPs is they are taxed eventually as normal income when extracted during retirement. So while the capital gains earned are not taxed while in the RRSP per se, they are taxed when extracted at 100%, rather than at the capital gains rate of 50%. The offsetting benefit to this is the long tax deferral an RRSP offers.
All in all, if you are not maxing out your RRSPs and TFSAs (i.e. no non-registered investments) it's hard to go wrong with any strategy.
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This is true of course, but theoretically at least the plan is to be in a lower tax bracket at retirement.