How do I use the Morningstar RRSP Calculator to determine my tax savings?

Gena Katz, a chartered accountant and principal with Ernst and Young, has the answer.

Gena Katz 11 March, 2004 | 2:00PM
Dear Expert:

We are a couple with one child. My annual salary was $51,500 in 2003 and I put $3,560 in my RRSP. My husband had an annual salary of $20,000 and made no RRSP contribution. Using the Morningstar Calculator, how can I calculate what the income tax refund or the income tax owed will be? Do I have to put $71,500 as the taxable revenue and $3,560 as RRSP? Or, do I have to make a calculation for each one of the revenues and then add the income tax results together?

Expert Answer:'s RRSP Contributions Calculator computes the tax savings you get from making a deductible RRSP contribution for 2003 by calculating the taxes payable for an individual before and after making an RRSP contribution. In Canada, we file tax returns and pay tax based on our individual incomes, not family income. Thus the calculator should be used for one individual's income and that same individual's RRSP contribution (in your case $51,500 and $3,560 respectively).

This calculator will not necessarily give you the final amount of your tax refund or the amount of tax you owe, as there are other figures that go into the calculation of your balance due or refund. For example the amount of tax your employer withheld at source, deductions such as childcare expenses and a variety of tax credits that might be available to you. You'll only be able to find out the actual amount of your tax refund or balance due by completing your income tax return. What the calculator gives you is simply the amount of tax savings linked to your RRSP contribution.

To find out how much an RRSP contribution may save you, try Morningstar's RRSP Calculator.

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Gena Katz

Gena Katz