How much are you allowed to contribute?
Simon Beauchemin, c.a.
Taxpayers who filed 2006 income tax returns with the federal government (in the spring of 2007) received a notice of assessment, like the one shown below, several weeks later indicating their personal information.
The important number is in the first part, in the last line: "RRSP deduction limit for 2007". This is the amount you should contribute before February 29, 2008 to benefit from a deduction in the computation of your taxable income for 2007.
Note that this notice combines all your unused RRSP contribution room since 1991, which can be carried forward indefinitely.
The different pension adjustments (PA, PSPA, PAR), only concern workers who contribute to a private pension plan (also called "pension fund") with their employer. The second part of this notice indicates contributions already paid into an RRSP but not yet deducted because of a requirement ($2,000 in overcontributions) or by choice. This amount can be carried forward and deducted in a subsequent return, up to the maximum for the year in question.
Example of a notice of assessment:
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|---|---|---|
RRSP deduction limit for 2006 |
$5,100 |
|
Minus: allowable RRSP contributions deducted in 2006 |
$3,500 |
|
Unused RRSP deduction limit at the end of 2006 |
$1,600 |
|
Plus: 18% of 20064 earned income of $40,000 |
$7,200 |
|
Minus: 2006 pension adjustment |
$4,100 |
$3,100 |
$4,700 |
||
Minus: 2007 net past service pension adjustment |
0 |
|
Plus: 2007 pension adjustment reversal |
0 |
|
RRSP deduction limit for 2007 |
$4,700 |
|
You have $1,100 of unused RRSP contribution room available for 2007 |
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