The three reasons are:
1) You can contribute more. This is because each calendar year additional RRSP room is generated based on 18% of your previous year's earned income and new TFSA room is generated; $5,500 for 2013.
2) Your contributions stays longer invested and therefore earns more tax free income. This is more relevant in the case of TFSA's as withdrawing funds from TFSA is not subject to tax as it is in the case of RRSP's.
3) You have an option to deduct your January contribution either or part against your 2012 taxable income or your 2013 taxable income.
Get more tax information and Q&A letters from our website www.tavana.ca
This blog is for general information only and cannot replace professional advice.
The reader is invited to contact the writer to discuss the contents of the newsletter.
Readers are advised to seek professional advice before acting on the material
in this newsletter