Millions of Canadians are patting themselves on the back for beating the March 1 registered retirement savings plan (RRSP) contribution deadline, but the overwhelming majority have no tax strategy beyond that.
A new survey from IG Wealth Management finds only 22 per cent of respondents pay attention to their taxes beyond their RRSP refund in the spring. 36 per cent, according to the survey, don’t even think it’s important.
Not having a tax strategy leaves less money for long-term investments and denies retirement savers potentially hundreds of thousands of dollars in compounded returns.
There are four basic tax tools available to average investors that can be utilized and co-ordinated for maximum efficiency. A qualified tax professional can provide a tailor-made strategy for individuals according to their financial circumstances. 
The same IG Wealth Management survey found 57 per cent of respondents consider their RRSP refund a bonus to “treat themselves or their family.” Forty-seven per cent said they reinvest their refund.
The idea that an RRSP refund is a bonus is a marketing myth that really means the contributor paid too much during the previous year (usually through payroll deductions from an employer). 
The RRSP is a great retirement savings tool because contributions can be deducted from your income, lower the previous year’s tax bill, and grow tax-free in investments for decades. 
The biggest savings come to those with big incomes who would normally be taxed at a high marginal rate. As an example; if your top rate is 40 per cent, your refund will be about 40 per cent of your contribution.
Reinvesting your refund in your RRSP will not only add to the total amount compounding in investments over time, but will also generate further refunds.
There are limits to how much you can contribute to your RRSP but even they can be too much. Unfortunately, contributions and all the returns they generate over the years are fully taxed according to the going marginal tax rates when they are withdrawn. 
You could be the victim of your own success - and even have some of your Old Age Security (OAS) benefits clawed back - if your annual RRSP withdrawals are taxed at a higher rate than the original contribution.
That’s when you need to look into your crystal ball and determine how much of your savings and RRSP refunds should be channeled into your Tax Free Savings Account. 
Unlike RRSP contributions, TFSA contributions cannot be deducted from income, but they - along with any investment returns they generate - are not taxed when they are withdrawn. The only exception are dividends from U.S. equities.
You can adjust that balance according to each year’s income and over time as your retirement goals become clearer, but the ideal tax situation would allow you to draw income from your RRSP at a low marginal rate and top up any additional income from your TFSA (tax-free).
There are also contribution limits on TFSAs, but there are ways to incorporate investments in non-registered accounts into your tax strategy.
The biggest tax advantage outside of a TFSA or RRSP is the 50 per cent capital gains exemption, which only taxes half of the gains on stocks or other equity investment when they are sold. 
While a 50 per cent capital gains exemption is not as good as a 100 per cent exemption in a TFSA, investors in non-registered accounts can also benefit from market losses. Tax-loss selling permits the use of equity losses to recoup capital gains taxes already paid in the past three years or apply them against future capital gains.  
Dividend tax credits are also granted on eligible equities in non-registered trading accounts.
Investors can also keep more of their tax dollars invested by splitting income with a lower-income spouse, who is taxed at a lower marginal rate. 
Higher income spouses can split up to half of their income with a lower income spouse once they turn 65 but there are ways to transfer the tax burden beforehand through a spousal RRSP. The higher income spouse can deduct contributions from their income (at a high marginal rate), and withdrawals are taxed in the hands of the lower income spouse (at a low marginal rate).