How Much Can I Contribute?

RRSP contribution limits

An RRSP is an investment that provides you with valuable tax breaks while you're working and when you retire.  However, there are limits.  

Contribution maximums

You may contribute to your RRSP until December 31 of the year in which you reach age 71. The amount you can contribute is determined by the "earned income" you report on your tax return.

Earned income includes salary or wages, alimony received, and rental income, among other income sources, but does not include items such as investment income.

Your new annual contribution room is 18% of your previous year's "earned income", up to an annual limit.

Annual limit:

YearMaximum RRSP Contribution
2010 $22,000
2011 $22,450
2012 $22,970
2013 $23,820
2014 $24,270
2015 $24,930
2016 $25,370
2017 $26,010

This contribution room above is reduced if you belonged to a pension or deferred profit sharing plan (see your T4 slip from your employer). And it is increased in some situations too. For example if you did not use your RRSP contribution room fully in past years, or you received certain amounts like severance, a retiring allowance, a foreign pension plan payment, or you recently left your group pension.

If you go over this limit, you are penalized 1% a month on the excess amount. Although, up to $2,000 can be overcontributed during your lifetime without penalty, if you expect to deduct that in future years.

Information about the amount of contribution room you have available is noted on your annual Notice of Assessment from the Canada Revenue Agency (CRA). If you're unsure of your contribution limit, it's available from the CRA by calling at 1-800-267-6999.

Annual contribution deadline

To be eligible for an RRSP deduction in a specific taxation year, you can make contributions anytime during the year, or up to 60 days into the following year. 

Contribution carry forward

If you do not make your maximum annual RRSP contribution, any unused portion is automatically carried forward, so you can use it in any future year(s).

Using your RRSP deduction wisely

Once you have contributed, you are free to explore rules to make the most of your RRSP deduction.

You can choose not to deduct your entire contribution right away. Saving a tax deduction to use later might have its advantages:

  • Your money grows in a tax-sheltered environment, while you wait to use your tax deduction.
  • If you wait to deduct some or all of this year's RRSP contribution, you might get more tax savings.

We suggest you check with your tax advisor or your Prairie Centre Credit Union Financial Specialist before electing to carry-forward RRSP deductions.

 

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