You have until March 1, 2002 to make your Registered Retirement Savings Plan, (RRSP) contribution. All deposits made by this date can be applied to reduce your 2001 income taxes. Look up your tax assessment from last year now, or call Canada Customs and Revenue Agency, (CCRA) to find out your RRSP limit.

Much has been written about the benefits of RRSP investing. In general, your contribution is deductible (within limits) from your income and the result is that you pay less tax. Often you receive a tax refund in the form of cash from the government, or you will pay less tax when you file your tax return. In addition, the RRSP account grows tax free until you begin to withdraw retirement income.

For those who have little or no RRSP room, there is another option to reduce your 2001 income tax, but you must act before March 1. A Labour Sponsored Investment Fund, (LSIF) has the same deadline as RRSP contributions and provides additional tax relief in the form of tax credits. Here's how it works. The LSIF invests in small and medium sized Canadian companies. The companies are usually not listed on any stock exchange. The federal and Ontario governments provide tax credits to encourage making this type of investment. Both levels of government offer a credit worth 15% on an investment of $5,000. There are a few LSIFs that attract an additional 5% tax credit from Ontario. This extra credit is offered because the companies purchased by the fund are involved in a significant amount of research and development. So the tax credit can be from 30% to 35% ($1,500 to $1,750) on a maximum investment of $5,000.

One of the worst mistakes a tax payer can make, is to miss out on their yearly RRSP contribution. It's not too late. This is one example of where time, and not timing, makes good sense.

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.