RRSP contributions you withhold from remuneration
A registered retirement savings plan (RRSP) contribution that you withhold from remuneration you pay an employee in a year automatically reduces the remuneration on which you have to deduct tax if you make the contribution on behalf of the employee. This applies to an RRSP contribution you withhold from remuneration on which you have to deduct tax, regardless of the amount of the payment or whether it is paid periodically or in a lump-sum. However, you have to have reasonable grounds to believe that the employee can deduct the contribution for the year.
The total amount the employee contributes to their RRSP or to their spouse’s or common-law partner’s RRSP cannot be more than the employee’s available RRSP deduction limit for the year.
Generally, we consider you have reasonable grounds when your employee has given you confirmation that the contribution can be deducted for the year, or you have a copy of the employee's RRSP deduction limit statement from their notice of assessment.
You do not need confirmation of the employee's RRSP deduction limit when you directly transfer the eligible part of a retiring allowance to their RRSP. This is because a special deduction under paragraph 60(j.1) of the Income Tax Act applies to this amount. For information on how to calculate the eligible part of a retiring allowance, see Retiring allowances.
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