With the March 3rd deadline only three days away; here are some important RRSP facts:
To see how much you can contribute to your RRSP for 2024, refer to your Notice of Assessment, which can be found with your last year’s tax return. Alternatively, if you have a Service Canada account, the information should be there.
Maximum Contribution for 2024
18% of 2023’s earned income; to a maximum of $31,560
What Makes up Earned Income?
Earned income is income you have received for work you have done. It includes the annual total of:
• Net employment income
• Net income from a business or partnership
• Net rental income
• Net research grants
• Taxable disability benefits
• Supplementary unemployment benefits
• Taxable alimony, maintenance or child support
• Certain royalty income
What is Not Included as Earned Income
• Investment income
• Taxable capital gains
• Limited partnership income
• Death benefit (from Life Insurance)
• Retiring allowance
• Pension or DPSP income payments from RRSP, OAS, CPP or QPP
Contribution Rules
• Unused contribution room can be carried forward indefinitely (subject to age limits)
• Contributions are deductible for the previous year if made within 60 days of year end
• Contributions may be carried forward indefinitely and deducted in future years
• Contributions to an RRSP may be made up to and including the year in which you turn 71yrs
• By December 31 of that year (age 71), RRSPs must be deregistered or transferred to a Registered Retirement Income fund (RRIF) or an annuity
Spousal RRSP
• Contributor claims the deduction for a spousal RRSP
• Deduction limits are based on the contributor’s contribution room, not the spouses.
• Plans and assets are controlled by the spouse.
• Contributor (not the spouse) pays taxes on withdrawals, if withdrawals are made within the first three years after contribution.
• Contributions to a spousal plan may be made up to and including the year the spouse turns 71, as long as the contributor has earned income.
Over-contribution
You may contribute up to $2000 above your contribution limit without penalty. However, the over contributed amount will not be allowed as a tax deduction and any amounts over $2000 will be subject to a 1% per month penalty tax. Unused contribution room can be carried forward indefinitely; subject to age limits.
If you have any questions or need to contribute for your 2024 tax return, don’t hesitate to give me a call.
Have a great weekend,
Tracey & Paige
Sources:
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