TORONTO, February 18, 2010 — Fewer than one-in-ten (eight per cent) young Canadian professionals aged 18-30 who are currently attending or have completed college or university feel they are great at tax planning, according to the RBC Tax Planning Poll. However, 80 per cent of respondents believe that learning about tax saving strategies is important, indicating a demand for advice to help young professionals build a strong financial foundation as they kick start their careers.
"While tax planning may not be the most interesting thing to learn about, having a few simple tax saving strategies in place can help ensure a maximum return," said Lee Anne Davies, head, Retirement Strategies, RBC. "Every dollar counts and keeping more money in your pocket can help you focus on your current financial priorities while preparing for the future."
Three-in-four (76 per cent) young professionals feel the need to start investing for their retirement, more so among those who are also interested in learning more about tax planning (82 per cent), further underscoring an interest in accessible advice on tax and financial planning strategies. Of the 24 per cent who do not currently feel the need to start investing for retirement, half of the respondents (53 per cent) would like to start, but say they can't due to their current economic situation.
"Balancing current financial responsibilities and savings goals can be challenging, but starting with small steps now can make a big difference in your future," said Davies. "One of the most effective ways to start investing is to have an automatic savings plan. Many people find that they don't even miss the money, because they never see it."
RBC provides the following advice to maximize tax savings and start investing:
1) Start early and invest regularly. Saving for retirement may not be a priority when it's decades away; however, one key to achieving your retirement goals is to start preparing at a young age. Regular investment strategies, such as an automatic RRSP contribution program, will help build a nest egg from small but consistent savings. Find out about your unused contribution room and consider topping up your RRSP when you receive work bonuses or tax refunds.
2) Get next year's tax refund early. If you normally get a tax refund, you could consider applying to the Canada Revenue Agency on CRA Form T1213 for a waiver to have your employer reduce your taxes withheld at source from your paycheque. Quebec residents could also use Revenue Quebec's Form TP-1016.
3) Consider a Tax-Free Savings Account. With a Tax-Free Savings Account, your money grows tax-free, up to $5,000 per year. Also, unused contribution room can be carried forward to future years and any money withdrawn will be added to unused contribution room so you can re-contribute that money starting the following year.
4) Carry forward your RRSP tax deduction. If you make an RRSP contribution this year, you don't have to claim it on your 2009 tax return. You can carry forward your RRSP tax deduction to a future year, when you are earning more and in a higher tax bracket, to maximize your tax reduction.
The RBC Tax Planning omnibus was conducted by Ipsos Reid between January 29 and February 5, 2010. This online survey of 503 young Canadian professionals, between the ages of 18-30 and who are currently attending or have completed college or university, was conducted via the Ipsos I-Say Online Panel, Ipsos Reid's national online panel. The results are based on an unweighted probability sample of this size, with 100 per cent response rate. With a representative sample of this size, the results are considered accurate to within ±4.4 percentage points, 19 times out of 20. Margins of error for subgroups will be larger.
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Jill Quinn, RBC, (416) 313-8121
Cyndi Maisonneuve, RBC, (416) 974-1757