It’s the last day of February, Wednesday, and if that doesn’t ring a bell you likely belong to a majority of Canadians who did not make any RRSP contributions this year.
A recent survey by Scotiabank found that just two in five Canadians — roughly 39 per cent — said they planned to contribute to an RRSP for the 2011 tax year.
That was down sharply from 53 per cent a year earlier.
Meanwhile, CIBC issued its own poll last week that found about one quarter of Canadians who planned to make a contribution this year still had not done so.
Half of them said they planned to wait until the final two days before contributing.
The decision to invest in an RRSP has been complicated in recent years by the introduction of tax-free savings accounts.
Although TFSAs don’t provide a tax deduction for money going in, money taken out later, including interest, dividends or capital gains is not subject to taxation.
RRSP contributions, on the other hand, are tax deductible going in but money taken out in retirement, including any gains, is subject to taxation.
Many banks and financial institutions are offering extended hours to give procrastinators extra time to make their contributions and some offer special interest rates on RRSP accounts. Contributions can also be made over the phone and online.
Cynthia Caskey, a vice president at TD Waterhouse, says you do not have commit to a last minute investment strategy.
“I think at this point its easy to park the money and then make some decisions and revisit it,” she explained.
Larry Moser, regional sales manager at BMO, says he has some advice for late contributors for next year.
“What I’d love to see is that everyone who is starting to save for an RRSP for next year, starts tomorrow. What we recommend is always taking whatever amount you can afford off your paycheque,” said Moser.
Contributions made online by 11:59 p.m., Wednesday, will count for the 2011 tax year.