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RRSP Time

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Canadian taxpayers don’t need a calendar to know that the registered retirement savings plan (RRSP) contribution deadline is approaching—the glut of television, radio, and internet ads which fill the airwaves and computer screens this time of year are reminder enough. And, while RRSP planning and retirement planning generally are best approached as an ongoing, year-round activity, it is true that an imminent deadline tends to focus the minds of taxpayers on such issues.

This year, the deadline for contributions to an RRSP which can be deducted on the 2014 tax return is Monday March 2, 2015. (While the deadline is technically 60 days after the calendar year-end, or March 1, the federal government has invariably extended that deadline by one day when March 1 falls on a Sunday, as it does this year.)

There’s not a lot that’s new with respect to the rules governing RRSP contributions for 2014. The maximum allowable contribution for the year is 18% of earned income for 2013, or $24,270, whichever is less. Many if not most Canadians, however, have unused RRSP contribution room, the result of having made less than the maximum allowable contribution in previous years. Consequently, almost everyone’s RRSP contribution limit for 2014 will be much higher than the $24,270 statutory amount.

There are a number of ways to find out one’s actual maximum allowable contribution for 2014. Taxpayers who have kept the Notice of Assessment from their 2013 tax return will find that information on page 1 of the Notice. The information is also available online, using the Canada Revenue Agency’s (CRA) “Quick Access” feature at www.cra-arc.gc.ca/quickaccess/. It’s not necessary to pre-register to use Quick Access, but taxpayers wishing to do so must provide their social insurance number, date of birth, and the amount entered on line 150 of their 2013 tax return. Finally, taxpayers can call the CRA’s Tax Information Phone Service at 1-800-267-6999. In order to obtain RRSP contribution information (or any personal tax information) over the phone, the taxpayer must provide his or her date of birth and social insurance number, along with the figure reported on line 150 of the 2013 tax return, in order to fulfill the CRA’s security requirements.

Once the contribution limit for 2014 is determined, the taxpayer is free to make a contribution of any amount up to that limit and to then deduct that contribution amount on the return for 2014. Taxpayers who make a contribution in the first two months of 2015 also have the option of deducting some or all of that contribution on the return for 2015, to the extent that it was not claimed on the 2014 return.

More information on making an RRSP contribution for 2014, and the RRSP system generally is available on the CRA website at www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/menu-eng.html.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.