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Gold/Mining/Energy : TAXES, TAXATION, TAX and Canadian stocks
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To: Jordan Levitt who wrote (250)11/8/2000 1:29:16 PM
From: Michael Dean  Read Replies (2) of 548
 
Thanks Jordan! You are of course correct.

In reasoning that your capital gains will be taxed fully as income if left in the RRSP and at half that rate if accumulated outside, I forgot one factor .. you have only half the capital to invest to start with.

Assuming $100K in RSP vs. $50K outside, invested purely for capital gains (no distributions) at 16% for 10 years, I come up with $220,571 vs. $177,929 after taxes paid. A significant advantage to the RSP even at only 10 years. Oop's.

I still contend that a major RRSP advantage is that deductions are at your marginal rate, and withdrawals will be at close to average rate which can be significantly lower if your other income is low.

I also believe that there are other reasons that one might want to cap an RSP at some level (say $1,000,000 for example) and then begin to build a non-registered portfolio or acquire hard assets.

Thanks again,

Mike
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