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Email this4:13 pm
Has anyone heard of ROI Fund from ROI Capital? It's boasting 30% tax credit, and RRSP savings of up to 40% and a 5% cash back for a 5,000 investment. That's an instant refund of up to 85% of your money. What do you think? Is this for real? What's the catch?
9:49 pm
The RRSP tax savings of up to 40% is the same for any RRSP contribution. It's more of a deferral of income taxes (you pay when you withdraw the money), than it is an instant refund.
The 30% tax credit sounds like the Labour Sponsored Investment Fund (LSIF) credit. This is being phased out, and it's the last year that Ontario is offering the full credit. This indeed sounds like free money; the tax credits offset your taxes for the year. Catches:
- Available in Ontario only.
- The investment must be held for 8 years or you have to repay the credit.
- "LSIFs have been criticized in the past for mediocre performance and high management fees," according to an article from a few years back.
The 5% (or 10%) cashback is... ? Is this just an incentive? Or a loophole to get the 30% tax credit on the max $5000 without investing the full $5000?
Catches:
- The cashback is taxed as income, offsetting any RRSP tax savings for that portion.
- The cash must come from somewhere: either it reduces the investment by that amount, or it will be offset by higher management fees over the years.
Some of the info is here: http://roicapital.ca/pdf/10_Ca....._Offer.pdf
So basically, the 40% is a standard RRSP thing, the 30% is an Ontario tax thing, and only the cashback is an ROI-specific thing.
I'm not an accountant. Anyone who can clarify, please do!
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