Excess amounts from a RRIF
An excess amount is any payment you receive from your RRIF that is above the minimum amount required to be paid out for the year. Under certain circumstances, excess amounts can be transferred directly to your RRSP, RRIF, SPP or PRPP, or to an annuity.
You cannot use Form T3012A, Tax Deduction Waiver on the Refund of your Unused RRSP, PRPP, or SPP Contributions from your RRSP, to withdraw unused contributions for an excess RPP lump-sum payment transferred to the RRSP or RRIF.
Excess amount from RPP lump-sum payments
In most cases, if you transfer an RPP lump-sum payment directly to another RPP, SPP, RRSP, PRPP or to a RRIF, you do not have to include any part of the payment in your income, and you cannot deduct it. However, the Income Tax Act limits the amount you may transfer tax-free from a defined benefit provision of an RPP to a money purchase provision of an RPP, and RRSP or a RRIF.
If the amount you transfer is more than the limit, you have to include the excess transfer in your income. Your T4A slip shows the excess transfer as pension income in box 018, which you report on line 130 of your income tax and benefit return.
If you made the excess transfer to your RRSP for 2016, we consider you to have contributed it to the RRSP in the year in which you transferred it. Even if the excess transfer is made to your RRIF, we still consider you to have contributed it to your RRSP. In both cases, the carrier will give you an RRSP receipt for this contribution.
You can deduct these RRSP contributions on line 208 of your income tax and benefit return, up to your RRSP deduction limit for the year in which you made the transfer. If you cannot deduct the contributions because they are more than your RRSP deduction limit for the year, you can leave them in your RRSP or your RRIF and deduct them for future years up to your RRSP deduction limit for those years.
You may be subject to the 1% per-month tax on the part of your unused RRSP contributions that are excess contributions during the period these contributions stay in the RRSP or the RRIF. For more information, see What happens if you go over your RRSP/PRPP deduction limit?
Withdrawal from an RRSP or a RRIF
If you withdraw an excess transfer from an RRSP or a RRIF in 2016 and we consider you to have contributed an excess transfer to your RRSP, a deduction is available if you meet both of the following conditions:
- you did not previously deduct the excess amount as an RRSP contribution; and
- you included the excess amount in your income for the year you received it.
You can use Form T1043, Deduction for Excess Registered Pension Plan Transfers You Withdrew from an RRSP or RRIF, to calculate your deduction. Deduct the amount on line 232 of your income tax and benefit return.
Completing your income tax and benefit return
The excess amount shown in box 24 of your T4RIF slip is for information purposes only. Only include the amount shown in box 16 of the same T4RIF slip.
If the RRSP or SPP from which you receive the withdrawal or commutation payment in 2016 is a spousal or common-law partner RRSP, or the RRIF from which you receive excess amounts in 2016 is a spousal or common-law partner RRIF, and your spouse or common-law partner made contributions to any of your RRSPs in 2014, 2015, or 2016, your spouse or common-law partner may have to include in income all or part of the amount received. For more information, see Withdrawing from spousal or common-law partner RRSPs.
Reporting the income
- If you were under 65 on December 31 of the tax year and had received the payment for a reason other than due to the death of a spouse or common-law partner, report the income on line 130 of your return.
- If you were 65 or older on December 31 of the tax year or you received the payment due to the death of your spouse or common-law partner, report the payment on line 115 of your return.
Claiming a deduction
- If you directly transferred this amount to your RRSP, claim a deduction for the amount on line 208 of your return.
- If you directly transferred this amount to another RRIF or to an issuer to buy an eligible annuity, claim a deduction for the amount on line 232 of your return.
If you received the payment in cash or by cheque before making the transfer, the transfer is not tax-free. You have to report the income on your return and you cannot claim a deduction.
If you were 65 or older on December 31 of the tax year you received the payment due to the death of your spouse or common-law partner, the payment that you report on line 115 of your return is eligible for the pension income amount at line 314 on Schedule 1.
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