RRSP - A few clarifications needed

[wing0]

I've read up on some of the topics on RRSP here. I'm really not that familiar with this RRSP thing and how it can help, but my situation is as follow.

Myself:

I was in co-op for 8 months in 2007(back to school now) and my income(under 30K) is still within the 15% tax bracket. The company I worked for already deducted tax, CPP, EI from my paycheque and with my tuition credits, I might not have to pay or get refund back. Is it still wise to buy RRSP just for later years?

I can contribute to RRSP based on my 2006 NOA amount (denoted as X)+ 18% of 2007 income(Y)(does school bursary affect this?). I can then claim the X amount in my 2007 tax return to avoid paying tax on the X amount from my 2007 income. Right?

The Y amount can only be claimed towards 2008 income(then why contribute now?)

I will be earning in the 22% tax bracket in the 2nd half of 2008, nothing for 1st half(due to school).
Should I claim the X amount on 2007 or 2008 tax year?
Would I really save a lot of tax by doing this?

My father:

He became self-employed in around May or June 2007, I don't think he's been keeping up with his RRSP contribution at all. What is the tax rate on sole proprietorship income? I assume it's like revenue - some expenses = income for 2007? He also wants to look into contributing into RRSP to lower the tax he have to pay for 2007. Any pointers here?

[Krox]

If you put money into an RRSP before the end of the month, you claim the receipt on your 2007 taxes. After that it goes for 2008.

It sounds like you won't get that much benefit using the deduction this year. However, you are allowed to carry foward RRSP deductions. So even if you contribute for 2007 you don't have to use it until you are making more money. The benefit of this is that it allows your money to grow tax free from this point in time.

[TopTaxGuy]

The maximum amount you can contribute to your RRSP for your 2007 taxes is disclosed on your 2006 (last year's) Notice of Assessment. You have noted that you can contribute an amount as 18% of your 2007 income which is incorrect.

See How much can I contribute to my RRSP? (http://www.taxresource.ca/personaltax/rrsp_contributions.html)

Typically you would use an RRSP for tax averaging when you are in a high income bracket this year and expect to be in a low bracket in the next or future years. It appears your situation is reversed.

My suggestion is to consider your 2007 tax situation including your education credits and then use your RRSP contribution to reduce your taxes to zero.