The key to a happy life during your golden years is to one Solid pension plan. In addition to the Canada Pension Plan (CPP) and the benefits of old -age security (OAS), you can set yourself up with a self -driven pension with accounts with a tax clear status such as the Registered pension savings plan (RRSP).
However, there are a few things that Canadians tend to do that the Canada Revenue Agency (CRA) may feel inclined to do the type of research that influences your overall pension income. If you know about the red flags you can help prevent unnecessary attention from the CRA. Let’s see what they are.
Cra red flags to watch
The CRA keeps an eye on things such as how much you contribute to your pension accounts and a few other factors. They look for things that do not match the regulations. RRSPs can be excellent tools for making a great pension plan, but abusing the rules, with or without the intention of doing this, can activate an audit. Here are the three large red flags that you want to look at if you want to avoid the vigilant eyes of the CRA:
- Over confirmation to your RRSP: The notification of the CRA assessment outlines exactly how much you can contribute to your RRSP each year. More contributions than the limit, especially after the amount of $ 2,000, can result in a tax penalty of 1% per month on the amount that the limit exceeds. It is important to know the limit, because even unintended excess contributions can activate an audit and fines.
- Investing in non-qualifying assets: The CRA has identified the qualifying investments that you can keep in a pension account Like the RRSP. Participating in non-qualifying or suspicious investments can lead to the CRA investigating your account. Many investors are gathered to make investments that are contrary to CRA rules, resulting in possible audits, heavy taxes and fines.
- Reporting too many investment losses: When you are confronted with investment losses, it is important to report them to the CRA. However, reporting frequent losses can express concern about the CRA. It can indicate poor investment strategies and a potential abuse of the account. A well -diversified portfolio and regularly assessing your investment choices can show the CRA that you manage the account properly.
If you know these red flags, you can stay on the right side of the CRA in the long term and protect the value of your RRSP.
Good RRSP investments
Let’s talk about qualifying investments that you can make in an RRSP to tune into a good pension plan. When choosing investments for your self -driven pension portfolio, you want to get assets with risk levels that you are comfortable with and that match your goals. There is no shortage of potential investments on the TSX.
For this, Enbridge (TSX: ENB) is an excellent example to consider. The market capital company of $ 134.90 billion, with head office in Calgary, is a giant in the energy industry. It possesses and operates an extensive network of mid -stream assets that transport hydrocarbons in the US and Canada. The pipeline network transports approximately one fifth of the produced hydrocarbons produced and consumed in North America.
Enbridge also has one of the largest regulated utilities in the region and the largest natural gas distribution company in the country. It also has a growing portfolio of assets for renewable energy that sets up for a stronger performance in a greener energy industry.
Enbridge is a staple in many investors portfolios because of the reliable history of dividend payments and the dividend growth treak that currently comprises for three decades. At present, Enbridge shares acts for $ 61.88 per share and its investors pays their shareholder dividends with a juicy dividend yield of 6.1%.
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When managing your RRSP you must be careful with how much you are investing, where you invest and have a disciplined approach. By avoiding the Cra -Red flags, you can lower the chances of an audit. It is always a good idea to talk to financial experts who can help you ensure that your RRSP will remain a large part of your pension plan.
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