I <3 U CRA

I always knew there was a reason I liked tax accountants.

Neil was a bit… delinquent… in his taxes and hasn’t done his 2005 return yet. Considering the deadline for 2006 is now coming up, he sucked it up and called an accountant to deal with filing it all. He had some capital gains/losses and real-estate transactions that spanned the years to deal with, so it made sense to have a professional go through it all to make sure it was all tickety boo.

But thus far, the best piece of accounting service we’ve gotten is some advice on a way to move some money around that we already have and make thousands.

I’m sure I’ve mentioned before that we’ve put a deposit down on a condo that’s supposed to be completed sometime this summer.

Well we figured that because Neil has already owned a home, we don’t qualify for the New Homebuyer’s Plan to withdraw up to $20,000 from an RRSP, tax-free, for part of the down payment.

We were wrong. “We” don’t qualify – but “I” do. Each person on the deed for a house may contribute individually from their RRSPs, up to $20,000 to be repaid over 15 years. So if “We” qualified, we could each contribute that much (if we had it of course).

Since the initial deposit on the condo, Neil and I have been furiously dumping money into a high-interest savings account over the past year in order to minimize the amount of mortgage we’ll have upon completion and cover closing costs. Thanks to some shrewd finanacial management on both our parts, it’s a sum nearing the $20k mark.

Conveniently, thanks to my compulsive need to be employed, even when said employment didn’t yeild enough income to contribute regularly, my RRSP allowance had more than enough room to contribute that amount.

So, with 72 hours to spare before the 2006 contribution deadline, Neil and I wrangled together a bank draft and RRSP account, and moved our money in the nick of time.

What did this accomplish?

Instead of my usual $1000 tax return again this year, I’ll be getting a cheque from the Canada Revenue Agency for a whopping $6000+. The conditions of getting that money into the house, along with qualifying for the plan, are just that the money must remain in the RRSP for 89 days (no problem there) and the bank will have to write a cheque for the amount directly to the sellers of the property, to ensure it’s being used for a home purchase.

Of course it’s not all sunshine and rainbows and frolicking in large piles of cash. That extra $5k will be used for some significant expenses, including going back into the house account, so we can meet our savings goal if emergencies come up, or my unemployment lasts any significant period of time.

In the meantime, though, it’s nice to be able to use one of the government’s RRSP borrowing programs for a significant benefit. I had no idea the program could be quite as beneficial as it has been to us this year.

And we very nearly missed it – if not for a poignant question about our financial planning and some great advice from our accountant.

Tax accountants. Not only are they useful, they are also (from my limited experience working in a firm) HIGHLY entertaining when intoxicated.

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