So one of the tricks financial planners like to pull out of their hats (in Canada at least), if you are going to receive a refund, you use a short term LOAN to buy more RRSPs and thus MAX out your RRSP.
Example:
If I was going to get a refund of $1200 (yeh right), if I took out a loan for $1560.00 I could max out my RRSPs. This assumes I am taxed at a rate of 30%, and that I pay off the loan right away (and I have $1560.00 in RRSP room as well). You don’t understand still? Let’s do the math:
The important things to remember is, if you were planning on using your refund to pay down your mortgage or some other debt, that is good too, don’t get convinced that the only good idea is to get a loan to max out your RRSPs! Pay off the darn loan if you get it as well! DON’T BORROW THE MONEY FROM YOUR CREDIT CARD (can I be more exact, don’t do it).
It’s an idea, but not the ONLY good idea at RRSP time –C8j