How contributions affect your RRSP/PRPP deduction limit

What is your RRSP/PRPP deduction limit?

Your registered retirement savings plan (RRSP) and pooled registered pension plan (PRPP) deduction limit, often called your “contribution room” is:

  • the amount that you can contribute to your RRSP, PRPP, or SPP
  • the amount that you can contribute to your spouse or common-law partner’s RRSP or SPP.
  • the amount your employer can contribute to your PRPP
  • the maximum you can deduct on your tax return, reducing your tax for that year

Note

Certain types of qualifying income transferred to your RRSPs are excluded from the calculation of your RRSP/PRPP deduction limit.

How is your RRSP/PRPP deduction limit determined?

The Canada Revenue Agency generally calculates your RRSP/PRPP deduction limit as follows:

The lesser of

  • 18% of your earned income in the previous year, and
  • the annual RRSP limit

Minus

Plus

The 2016 annual RRSP limit of $25,370

If you want to calculate your RRSP/PRPP deduction limit yourself, see chart 3 of Guide T4040, RRSPs and Other Registered Plans for Retirement.

Who can contribute to a RRSP, PRPP, or SPP?

Generally, you can contribute to your RRSP, PRPP, or SPP:

  • until December 31st of the year you turn 71 years of age
  • when you have available RRSP/PRPP deduction limit room.

You can contribute to your spouse’s or common-law partner’s RRSP or SPP until December 31st of the year that he or she turns 71 years of age.

What is the deadline to contribute to a RRSP, PRPP, or SPP for the purpose of claiming a deduction on your 2016 return?

Contributions made to your RRSP, PRPP or SPP or your spouse's RRSP or SPP from March 1, 2016 to March 1, 2017 qualify.

What if you contribute more than your RRSP/PRPP deduction limit?

Generally, you have to pay a tax of 1 percent per month on your contributions that exceed your RRSP/PRPP deduction limit by more than $2,000.

For more information, go to what happens if you go over your RRSP/PRPP deduction limit?

What RRSP, PRPP, or SPP contributions can you deduct on your tax return?

You can claim a deduction for:

  • contributions you made to your RRSP, PRPP or SPP
  • contributions you made to your spouse’s or common-law partner’s RRSP or SPP
  • your unused RRSP, PRPP or SPP contributions from a previous year

You cannot claim a deduction for:

  • amounts you pay for administration services for an RRSP
  • brokerage fees charged to buy and sell within a trusteed RRSP
  • the interest you paid on money you borrowed to contribute to an RRSP, PRPP, or SPP
  • any capital losses within your RRSP
  • employer contributions to your PRPP

What is not considered a RRSP, PRPP, or SPP contribution?

The following are not considered to be a RRSP, PRPP, or SPP contribution for the purpose of claiming a deduction on your tax return. Find out the special rules that apply if you:

Amounts you transfer directly to your RRSP, PRPP, and SPP do not affect your RRSP/PRPP deduction limit. However, you may need to include an amount in income and claim an offsetting deduction. See transferring certain types of payments for information about the special rules that apply.

Can contributions be made to a deceased individual’s RRSP, PRPP, or SPP?

No one can contribute to a deceased individual’s RRSP, PRPP or SPP after the date of death.

But, the deceased individual’s legal representative can make contributions to the surviving spouse’s or common-law partner’s RRSP and SPP. The contribution must be made within the year of death or during the first 60 days after the end of that year.

Contributions made to a spouse’s or common-law partner’s RRSP or SPP can be claimed on the deceased individual’s tax return, up to that individual’s RRSP/PRPP deduction limit, for the year of death.

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