All Canadians are encouraged to contribute to their RRSP to help them fund their future retirement. Here are some of the important dates to keep in mind. March 3, 2014 is the deadline to contribute to an RRSP for the 2013 tax year. The age limit to contribute is the year that an individual turns 71 by December 31. RRSP contributions for the tax year of 2014 have been raised since the previous year.
The maximum limit rose from $23,820 in 2013 to $24,270 in 2014 marking a $450 increase. It is possible to utilize unused limit for any year from 1991-2013 and carrying that amount forward to 2014, meaning that the limit may be higher for some individuals can also modify the limit.
This unused limit cannot exceed the individual’s contribution limit for 2013. The individual limit is determined by the information on the 2012 tax return and years previous, also from the other information the Canada Revenue Agency (CRA) has on file. If your earned income changes from what the CRA has on file the RRSP contribution limit may also change.
RRSP Contribution
The contributions that can be deducted from the RRSP are any contribution to the RRSP from January 1, 1991 to March 3, 2014. The individual can deduct these contributions if you did not deduct them from another year and it they are not above the deduction limit for 2013.
The following cannot be deducted: administration services for RRSP’s, brokerage fees charged to buy or dispose of securities within a trusted RRSP, the interest paid on money that was borrowed to contribute to an RRSP or any capitol losses of the RRSP. Contributions made to a spouse or common-law partner’s RRSP will come off the limit of the person contributing the money.
If you have reached the age limit to contribute but your spouse or common-law partner has not you are still allowed to contribute to their RRSP.
RRSP contributions are deducted using line 208 of the income tax and benefit return. Generally in this case the amounts contributed to the individual’s RRSP and the spouse or common-law partner cannot exceed the RRSP contribution limit.
The RRSP issuer will give the individual a receipt upon the contribution of to the RRSP in the amount contributed. If there was a contribution to a spouse or common-law partner the receipt will show the individual’s name as the contributor and partner’s name as the annuitant.
The receipts must be submitted if filing a paper return; if using EFILE, show the receipts to the provider and keep the receipts incase the CRA needs to follow up.
RRSP deduction limit
The RRSP deduction limit is based off the income in previous year’s tax return, if the individual has not filed a return for the previous year the limit will show as 0. The reason for this is the RRSP contribution limit is based off the individual’s income, without a tax return there is no income on record therefore the limit is 0.
This can easily be remedied by filing the previous year’s tax return before the RRSP deadline to calculate the RRSP limit for the current year.