FIN 502 Chapter Notes - Chapter 8: Human Resources, Trust Law, Government Communications Headquarters
Document Summary
Raise revenues, promote social equity, encourage/ discourage certain financial actions, mange economic trends: tax deferral often saves money because of the time value of money. General principle if you cant use the income for consumption purposes you shouldn"t have to pay tax on it until you can use it. Invest the tax deferred income at a rate or return that is untaxed get second advantage with faster compounding. Contributions are deductible from taxable income and accumulated at the before-tax rate of return. Other uses of an rrsp: lifelong learning plan (llp)- allows you to withdraw up to in a year for education expenses for you or your spouse and up to total. Start repaying the amount withdrawn 2nd year after withdrawal equal payments on 1/15. Capital gains deferral: no tax payable until realized, portfolio of shares can increase in value at the before-tax rate of return if the return consists of capital gains instead of dividends.
