The Building Blocks of Your Financial Future: RRSP Room & Tuition Credits (Part 4/5)

Filing a tax return is not just about the current year; it's also about building a strong foundation for your financial future. Two key reasons to file, especially for students and young professionals, are for your RRSP contribution room and tuition credits.

Earned Income, Earned RRSP Room: When you have earned income from a job, you build up contribution room for a Registered Retirement Savings Plan (RRSP). Even if you don't contribute right away, filing a return records this room, allowing you to carry it forward indefinitely to use when your income is higher. This is a smart way to plan for your retirement.

Carrying Forward Your Credits: Students who have paid tuition fees can claim a non-refundable tax credit. If you don't need all of the credit to reduce your tax to zero for the year, you can carry forward the unused amount to a future year when your income is higher. The only way to track and carry forward these valuable credits is by filing a tax return.

Source: https://www.canada.ca/en/services/taxes/income-tax/personal-income-tax/who-should-file-tax.html