Promote CELIAPP
If you are accumulating savings with a view to acquiring your first property, “the CELIAPP is really the program of choice,” says Sylvain Gilbert, tax partner and regional vice-president at Raymond Chabot Grant Thornton (RCGT).
The tax-free savings account program for the purchase of a first property has been in effect since 1er April 2023. You can contribute up to $8,000 per year, up to $40,000.
Your contributions are not only deductible from your taxable income, but under the roof of CELIAPP, the investment income they provide is also sheltered from tax.
When you empty the account to buy a house, the withdrawal is not taxable.
CELIAPP deadline
“With the RRSP, you can contribute in the first 60 days of the year 2024 to take the deduction in the 2023 declaration, but not with the CELIAPP”, underlines Natalie Hotte, practice manager, risk and knowledge management in taxation, at the Quebec Tax Training Center (CQFF, a strategic partner of RCGT since 2021).
“With CELIAPP, if we want to take the deduction in 2023, we must make our contribution in 2023,” she recalls.
Carry over the CELIAPP deduction
The CELIAPP contribution is deductible from income. “But we are not obliged to take the deduction in 2023. It can be carried forward, as in the RRSP, ad vitam æternam », Expresses Natalie Hotte with a formula that already predisposes to midnight mass.
She adds a parable.
University students who had savings and decided to deposit them in a CELIAPP should perhaps wait to take the deduction when their income is higher.
Natalie Hotte, practice manager, risk management and tax knowledge, at CQFF
Study the RESP
“If I had a choice, yes, CELIAPP first, then registered education savings plan,” continues Sylvain Gilbert.
Contributions to an RESP do not provide tax deductions, but the returns are tax-sheltered and this program remains very advantageous due to the subsidies paid by the federal and Quebec governments.
And I would go as far as the maximum contributions that allow you to benefit from government subsidies.
Sylvain Gilbert, tax partner and regional vice-president at RCGT
A contribution of $2500 produces an immediate profit of 30%. The contribution must be made no later than December 31 to be counted in the year.
Beyond a contribution of $2,500, it is better to carry the excess over to the following year to collect subsidies for the new year.
RRSP and age 71
February 29, 2024 is the deadline to contribute to the RRSP for the 2023 tax year.
Unless you celebrated your 71ste birthday in 2023. Because of this accomplishment, your RRSP contribution for 2023 must be made no later than December 31, 2023 (as long as your financial advisor isn’t already celebrating).
TFSA and cellar
The maximum contribution to a TFSA in 2023 is set at $6,500.
Since contributions are not deductible from taxable income and unused rights are accumulated from year to year, there is no rush to contribute to your TFSA before the end of the year.
With one nuance.
An amount withdrawn from the TFSA can be transferred again the following year, without regard to the rights accumulated otherwise.
“If you have to make a withdrawal from your TFSA, it is sometimes better to do it in December rather than in January,” argues Natalie Hotte.
“If I withdraw $5,000 from my TFSA in December 2023, this right will automatically regenerate in January 2024. If I withdraw it in January 2024, I will have to wait until January 2025 to get it back. »