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RRSP Maximum contribution limit for tax year 2015

    As tax season comes into sight, a well-rounded understanding of the RRSP allowable contributions and associated deadlines, should be on the top of all Canadian tax payers’ to do lists. Understanding the basics is critical in order to ensure the maximum benefits are received and more money lands in the pockets of Canadian tax payers. RRSP are registered retirement savings plans that allow Canadians to receive tax benefits for participating in the plan. A tax payer’s contributions to an RRSP decrease their taxable income and the savings are not taxed till the time of retirement, when the funds are withdrawn.

    It is predicated that at the time of retirement, most people’s taxable income will most likely be lower and therefore the tax payer will be in a lower tax bracket once the RRSP tax is collected.

    RRSP’s are generally straight forward and the main focus for most tax payers is ensuring they fully utilize the plan in order to derive all benefits offered. This means being in full comprehension of the maximum contribution limit for the upcoming tax filing year.

    The contribution limit is the total amount in which a person can contribute to an RRSP.

    The contribution limit is based on the previous year’s earned income.  The CRA defines earned income as the total amount of monies earned in a single tax year. This is generally made up of salary provided by an employer, business income and/or benefits received from the government such as employment insurance, disability pay or maternity leave pay.

    For the 2015 tax year filing, tax payers are eligible to contribute 18% of their 2014 earned income, to a maximum of $24,930. To be eligible to contribute the maximum dollar amount of $24,930, a tax payer must have an income of $138,500 or higher. If a tax payer did not earn the required income for maximum contribution, tax payers can still contribute over the 18% of earned income if they had not maxed out their contribution limit from the years of 1991 to 2014.

    This information will be provided to each tax payer via the CRA.Annual the CRA will provide each tax payer their individual contribution limit amount. This amount will be clearly displayed on tax payers’ previous year’s assessment sheet, disturbed from CRA concluding the previous year’s tax filing process. If a tax payer has not filed the previous year’s taxes, this must be done prior to receive a contribution limit. Until taxes are complete, the contribution limit will be zero.

    Additional regulations for RRSP include time and age compliance. The maximum contribution limit is time sensitive and must be made within 60 days after the end of the calendar year. For the 2015 upcoming tax filing, this date is February 29th, 2016. RRSP’s also have age restrictions. A Canadian tax payer may make RRSP contribute up to their defined maximum until the end of the year they turn 71. These regulations have not changed from the previous year.

    RRSPs are excellent vehicles for deferring tax payment and decreasing the total amount of tax an individual is required to pay, when the plan comes due. The regulations are generally straight forward and simple to comply with.  With a maximum contribution limit of 18%, tax payers have the ability to contribute a decent portion of their hard earned income to their savings account and ensure a secure and safe future.


    Christopher - BSc, MBA

    With over two decades of combined Big 5 Banking and Agency experience, Christopher launched Underbanked® to cut through the noise and complexity of financial information. Christopher has an MBA degree from McMaster University and BSc. from Western University in Canada.

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