Your RRSP contributions are tax deductible. That means you can claim them as a tax deduction when you file your income tax return- and lower the tax you pay. There are limits on how much you can contribute each year to your own RRSP and potentially your spouse’s RRSP. Your total contribution room for the year is the lower of the following:

  • 18% of your earned income for the previous year, or
  • The maximum contribution amount for the 2019 tax year: 18% of earned income you reported on your tax return in the previous year, up to a maximum of $26,500. If you are a member of a pension plan, your pension adjustment will reduce the amount you can contribute to your RRSP. You can also carry forward unused contribution room. If you don’t have the money to contribute to your RRSP this year, you can carry forward your contribution room indefinitely to future years. This unused contribution room will be considered on your RRSP Deduction Limit Statement, which you can find on your most recent Notice of Assessment or on CRA’s My Account. *

Example – Your contribution room was $15,000 in 2018 but you didn’t make an RRSP contribution. You carry this forward to 2019. If your 2019 contribution room is $26,500 (the maximum amount) you can make total RRSP contributions of $41,500 ($15,000 + $26,500) in 2019.

Unused RRSP contributions You don’t have to deduct an RRSP contribution on your tax return in the same year you make the contribution. You can wait and deduct it in a future year. You may choose to do this if you think your income will be higher in the future, moving you up to a higher tax bracket. This is called having unused RRSP contributions. Contact your advisor to learn more about how it works.

What happens if you over-contribute? In general, you must pay a tax if your unused RRSP contributions from prior years and your current contributions exceed the RRSP deduction limit shown on your latest Notice of Assessment by more than $2,000. The tax is 1% per month on the excess amount. Contact your advisor to learn more about excess RRSP contributions.

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