Financial Services Industry / RRSP -a 48 year scam
There are two options for contributing to RRSP: (1) reduce last year's taxable income for tax refund (tax shelter) (2) reduce this year's taxable income for tax reduction (income deferral). Tax refunds are a ready made market made up of contributors who may invest their RRSP refunds. Industry providers promote the tax refund option exclusively, fail to inform contributors of a hidden extra cost, and when asked, misinform potential contributors by stating unequivocally that the only difference in the two options is not having to wait for a refund with the income deferral option. Canadians contribute about $30billion to RRSP annually and receive about $10billion refunds-- an annual scam of individual contributors each of whom unknowingly pays an extra cost equal to their refund. Proof: contributor in a 33% income tax bracket has to earn $1500 taxed $500 to have $1, 000 to contribute to the refund option, compared to deferring $1000 income. The extra $500 income taxes $167 leaves his short $500 in the bank account.