Your RRSP contribution has been made, and you have been successful in creating a tax deduction for the year 2000. Congratulations, but it's not time to sit back and relax. The government will be here again next year, waiting to see if you qualify to empty a portion of your bank account into the public till.

Tax planning is a year round activity. It should not be done at the last minute in the dying days of February. Begin planning your year 2001 tax deductions today. Even though RRSP contributions are probably the most advertised form of tax relief known to Canadians, there are alternatives to RRSPs.

On October 18, 2000, the Federal Government announced a reduction in capital gains tax to fifty percent. With the recent decline in the stock market and these tax changes taking effect, you may want to look at tax deduction options outside of RRSPs.

In addition, you may be leery of having all your savings "registered" with the government, or your pension may not allow you a very lucrative RRSP contribution limit. One alternative to an RRSP contribution is using a conservative leverage program. The concept of leverage is to borrow to invest in an open, not registered, investment plan. All interest paid on the loan is tax deductible, dollar for dollar, creating similar tax relief as an RRSP contribution.

Yes, there is risk and much has been written on the hazards of using other people's money to invest. You must understand both the risk and reward of such a program. Consult with your trusted financial planner before undertaking a leverage loan. Make sure you feel comfortable with the concept and are able to weather any storms that may come your way.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.