Use your unused contribution room

If, for a given tax year, you do not make your maximum RRSP contribution (generally 18% of your income for the preceding year), you will have unused contribution room that you can use in subsequent tax years.

For example, if your maximum contribution for a year is $12,000 but you only contribute $2,000 to your RRSP, you may use the unused $10,000 portion to increase your contribution the following year for a total of $22,000 (assuming your income hasn't changed).

In other words, when you use it, your unused contribution room lets you exceed your maximum annual limit, which is $19,000.

Information about your unused contribution room appears in the RRSP Deduction Limit Statement section of the Notice of Assessment that you receive every year from the Canada Revenue Agency.

If you should come into some money unexpectedly, (inheritance, lottery winnings, bonus or other) it may be wise to use your unused contribution room and put this money in your RRSP. In some cases, you can even borrow to use your unused contribution room.

Excess contributions

By law, you are allowed to contribute up to $2,000 over your maximum, without penalty. The exceeding amount cannot be deducted from your taxable income for the current year but it can be deducted for subsequent years.