mm... hmm... you pay taxes, then you put in that $1000 and the government says "OH! Hey! We weren't entitled to the tax money on that $1000! Here you go... you can have it back..."

And... voila! Your post tax income is now magically converted to pre tax income.

The $167 you are snivelling about is the tax on the $500 of your income that did not go into the RRSP.

Trust me... the last thing this world has been in need of is another internet expert... :(

It appears from some replies to my post that experts on the subject are long overdue.

If you get a tax refund you must have paid tax. If your tax rate is 33.33% you paid $500 tax on $1500 income to have $1,000 to contribute. Your refund from contributing $1000 is $333. That leaves $167 tax unrecovered.

You can contribute $1,000 using form T1213. The $500 extra income required for the tax refund option, after $167 tax, is $333.33 extra cost.

It's all on my web site www.moneyyoudontknowyouhave.com

The government doesn't "have their hands in" RRSP's... they simply don't tax you on them until you withdraw them.

Having said that, unless I'm being matched by my company I don't tend to use RRSP's... I'd rather just invest and pay the taxes now when I can afford them.

I don't invest in anything that gov't has their hands in. I find all these investments that the gov't offers are all money grab as far as I am concerned.

Jeesh! Not another money expert!

er... that 1000 is pre tax income... not after tax income.

So... if I make 1500, my tax is roughly $500 at 33.33%

If I contribute 1000 to the RRSP, I'm only paying tax on $500... for a total tax bill of $166.65

For your "expert's" scenario to be true, you would have to be paying the RRSP in after tax dollars.

And that, my friends, is the problem with the internet... it gives every self styled expert a platform.

Personally, I preferred my crackpots yelling incomprehensibly from the street corners where they belong...

It seems all we consider is getting the most out of our savings and investments. If we look at income we find more savings and investments to manage.

For example at a tax rate of say, 33.33% I have to earn $1,500, subject to $500 tax, to have $1,000 to contribute to my RRSP. With a T1213 form I contribute $1000 income. Tax reduction is equivalent to the refund but I use $500 less income and save $333.33

Where have all the experts gone? You may wish to visit www.moneyyoudontknowyouhave.com