Quote:
Originally Posted by Cappy
Ok, so your still paying tax on the total income ($110,000 in your example) but you are getting a deduction on RRSP contribution to reduce your net income correct?
So, owing no other deductions, my income is $110,000, with 10k in RRSP deductions, would give me a net income for tax purposes of $100,000?
The only reason i ask is she has done this now for 3-4 years and always pretty much ends with no refund or balance as she is basically earning a consistent salary then using bonuses for RRSP. First time it's happened where she owes anything.
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That could be a payroll issue. Sometimes when companies issue bonuses that are elected to go straight to RRSPs they deliberately withhold less tax knowing that the RRSP deduction is coming.
However, when thats done the payroll department is essentially guessing. They withhold less tax assuming the RRSP is going to cover the reduced withholdings.
Otherwise in your $110K/$100K scenario you are essentially correct, assuming no other factors.