Halal RRSP choices
for your retirement
Halal RESP for
your child's education
Halal House Financing

Jeff (Jaafer) Gareau,
B.A., I.R.Econ.

Financial Advisor/Dealing Representative,
NO INTEREST Investments
Global Maxfin Investments Inc.


Halal RRSP

What is an RRSP?

A Registered Retirement Savings Plan is a savings plan that is "registered" with Canada Revenue Agency (CRA). It allows you to save money for your retirement by reducing your income taxes payable in the year of contribution. One of the other biggest benefits is that the investments inside of an RRSP grow on a tax-sheltered basis. That means you don't pay tax on the income your investments earn until you withdraw the money from your RRSP.
Think of your RRSP as an investment portfolio that can be the home to a variety of investments. You can choose to invest your money in investments that meet the Islamic investment guidelines, which is what Jaafer Syed Gareau and NO INTEREST Investments specializes in. For over a decade, we have been helping Muslims to save taxes and grow their investments according to Islamic guidelines.

RRSP funds can also be used for the down-payment on a person/couple's first home purchase (up to $35,000 per spouse in 2019) as well as for post-secondary education (qualifying university or college) for the annuitant. At retirement you can transfer your accumulated RRSP into any of the RRSP maturity options where they continue to grow tax sheltered until withdrawn often in a lower marginal tax bracket. This means that you can save taxes yet again. Further, if you are married and one spouse earns less than the other, you might be able to take advantage of income splitting in a Spousal RRSP.

How much can I contribute?

Your current RRSP contribution limit is 18% of your previous year's earned income to a maximum of $26,500 (for 2019) less your previous year's Pension Adjustment (PA) plus the current year's Pension Adjustment Reversal (PAR), if any. However, if you did not use your entire RRSP deduction limit for any preceding years, you can carry forward the unused amount so your RRSP deduction limit for the current year may be more than the maximum yearly amount. You are also allowed to over-contribute by $2,000 in a year over your RRSP Contribution limit. This can be deducted in future years but the good thing is that the gains inside are tax-free. Remember that one cannot make RRSP contributions in their own name after the year in which they turn 71 (i.e. Dec. 31st). One can contribute to the Spousal RRSP and still save taxes if that spouse is younger. Further, if there is contribution room, one can contribute all of their RRSP Contribution Room by Dec. 31st of the year they turn 71 and deduct the contribution in any subsequent year.

It is best to check your Notice of Assessment from Canada Revenue Agency (CRA). You will have received this after CRA has processed your previous year's tax return. This information is also available by calling the automated Tax Information Phone Service (T.I.P.S.) at 1-800-267-6999 or by registering at My Account on the Canada Revenue Agency website.

Maximum RRSP contribution limits for subsequent years are as follows:
Contribution limit

Should I contribute to a spousal

If you have a spouse that does not work or who earns substantially less, a Spousal RRSP is the best way to go. Our analysis of your PFR will confirm which type of account is best for you. Spousal RRSPs can greatly reduce taxes in retirement because you'll likely pay less tax by withdrawing the same amount of income from two smaller incomes than from one large one. i.e. if one spouse has CPP, a company pension plan, and an RRSP, the taxes payable will be higher with 3 forms of income than if the other spouse instead had the RRSP. With a Spousal RRSP, you can still defer taxes now and reduce them in retirement. A Spousal RRSP works best if it's likely that you and your spouse will be in different tax brackets in retirement. The person making the RRSP contribution benefits from the current tax deduction. However, at retirement, the spouse or common-law partner will also have an RRSP that provides income. Because the spousal RRSP income will likely be taxed at a lower rate, your combined tax bill may be significantly lower than the taxes paid on a single RRSP. Remember that you can contribute all or a portion of your maximum allowable RRSP contribution to a spousal RRSP.

Note: If money is withdrawn from a spousal RRSP or RRIF in the same year a contribution was made or within the two following calendar years, the income received will be attributed back to the contributing spouse, not the owner/annuitant of the RRSP or RRIF. This rule is known as the "three-year attribution rule". However, this rule will not apply if the owner/annuitant of a spousal RRSP converts to a RRIF and only the annual prescribed minimum amount is withdrawn.
What is the deadline for contributing?

For a tax deduction in the current year, the deadline for making your RRSP contribution is the first 60 days of the following year so for example, March 1st, 2019 was the deadline for making a 2018 RRSP contribution. The qualifying period for receipts that can be used as tax deductions is the first 60 days of any year. If the 60th day happens to fall on a weekend, the RRSP Deadline is usually the next business day.

What if I contribute too much?

You are allowed to exceed your RRSP contribution limit by a lifetime maximum of $2,000. Canada Revenue Agency (CRA) has provided this $2,000 over-contribution cushion to help taxpayers who accidentally over-contribute. There is a 1% per month tax penalty for contributions which exceed the sum of your maximum RRSP contribution limit and the lifetime over-contribution limit.

These are just some of the basic concepts of RRSP’s. For more detailed information, please click here. The bottom line is that RRSP’s or Spousal RRSP’s are usually the best way for Canadians to save income taxes who earn more than $30,000 a year. Make sure you are not giving away your hard earned money to the TAXMAN, learn more about RRSP’s today!