FrontFundr Blog

RRSP, Private Companies, Equity Crowdfunding, Crowdfunding, Bonds, Retirement

In Canada, we have the benefit of investing into Registered Retirement Savings Plan (RRSP) or Tax Free Savings Accounts (TFSA). And did you know you can use this money in ways to impact your community directly? This blog outlines how you can use RRSP or TFSA to invest in early-stage companies, as well as why entrepreneurs offer this opportunity to investors. This is especially timely as the 2018 RRSP deadline approaches on March 1st, 2019. 

What is an RRSP? 

A Registered Retirement Savings Plan (RRSP) is a personal savings account with special tax benefits. Did you know, you can reduce your current taxes by investing through your RRSP? The contributions you put into your RRSP account  are deductible on your income tax return, and therefore can be used to reduce tax. 

Income and gains earned on your investments through RRSP accounts are not taxed until withdrawn. The incentive here is to withdraw during retirement when you will typically be in a lower tax bracket. Your RRSP contribution limit for 2018 is 18% of the earned income you reported on your tax return in the previous year, up to a maximum of $26,030. 

Benefits of a Registered Retirement Savings Plan (RRSP) 

  • Tax-deductible contributions 

  • Tax deferral on any gains or income earned on the investment, until withdrawal 

  • Defer taxation until retirement, when the investor will likely be at a lower tax bracket 

 
What is a TFSA? 

TFSA stands for “Tax-Free Savings Account”, which is an account that provides tax benefits for saving in Canada. Any investment income, including capital gains and dividends, earned within a TFSA are not taxed, even when the funds are withdrawn. There are limits on how much you can contribute each year (for example, in 2018 the limit was $5,500). 

Benefits of a Tax-Free Savings Account (TFSA) 

  • Tax-free returns for future gains or income earned on investments 

  • Any return on investment will not be taxed, even when withdrawn 

 
The Benefits of using TFSA and RRSP to Invest in Early Stage Private Companies 

Investing through FrontFundr allows you to get to know the company and the people behind it, and be able to invest in companies that you believe in.


"Allowing investors to invest using their TFSA or RRSP opens up a whole new pool of brand champions to rally behind your company. Not everyone wants to invest from their personal accounts and enabling them to think of other possibilities to invest is beneficial for the company and the investor." 

Thealzel Lee, Co-Manager of VANTECH & Investor 

 

We currently have several campaigns live on the site that are RRSP and TFSA eligible, including our own campaign to grow FrontFundr and support more private companies and bring more opportunities to all Canadians. Click here for more information. 

*Not all securities are eligible for investment in a registered retirement savings plan (RRSP). You should consult your own professional advisers to obtain advice on the RRSP eligibility and risk of these securities.  



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