Excess Contributions

If you (or your employer for pooled registered pension plan (PRPP) purposes) contribute more to your RRSP, PRPP or SPP, or your spouse's or common-law partner's RRSP or SPP than your RRSP deduction limit allows, you will have an excess contribution.
Generally, you have to pay a tax of 1% per month on excess contributions that exceed your RRSP deduction limit by more than $2,000 unless you:

• withdrew the excess amounts before the end of the month when the excess contribution was made
• contributed to a qualifying group plan

If you withdrew the excess amounts under the Home Buyers’ Plan (HBP) or Lifelong Learning Plan (LLP), you may still be required to pay the 1% tax on all of your excess contributions.

If you have to pay this 1% tax, fill out a T1-OVP, 2022 Individual Tax Return for RRSP, PRPP and SPP Excess Contributions return and send it to your tax centre. When you file the return, send documents that identify the exact month(s) of all RRSP, PRPP and SPP contributions and RRSP, PRPP, SPP or RRIF withdrawals for the year(s) in question. For example, an RRSP account transaction statement for the month(s) in which your contributions or withdrawals were made. Please note RRSP receipts, T4RSP and T4RIF slips do not contain this information. Pay the tax within 90 days after the calendar year avoid late filing penalties or interest charged.

If you'd like the CRA to complete the return(s) for you, send us your authorization and the documents mentioned above that show the amounts and dates of your contributions and withdrawals indicating the exact months in which you have excess contributions.

In either case, if the supporting documents received do not show the exact months of the contributions or withdrawals, the CRA may assess the T1-OVP based on their records. This means that the contributions made in the first 60 days of the year would be included in the month of January and the contributions made during the remainder of the year would be included in March. As well, the CRA would include the withdrawals in the month of December.

Can the Canada Revenue Agency (CRA) cancel or waive the tax on your excess contributions

You can ask the CRA in writing to consider cancelling or waiving the tax if the following two conditions are met:

• your excess contributions on which the tax is based arose due to a reasonable error; and
• you are taking, or have taken, reasonable steps to eliminate the excess contributions

Fill out an RC2503, Request for Waiver or Cancellation of Part X.1 Tax – RRSP, PRPP and SPP Excess Contribution Tax. Include the following:

• why you made excess contributions and why this is a reasonable error
• any other correspondence that shows that your excess contributions are due to a reasonable error
• proof that the excess contributions have been removed
• documents that identify the exact months of all your RRSP, PRPP or SPP contributions and RRSP, PRPP, SPP or RRIF withdrawal for the year(s) involved

A waiver of tax refers to tax otherwise payable before the tax is assessed or charged to the taxpayer.

A cancellation of tax refers to the tax that was already assessed or charged to the taxpayer.

How does a voluntary disclosure work

If you realize the information you gave to the CRA is wrong or incomplete, you may be able to make a voluntary disclosure. To see if your disclosure qualifies for this program, go to Voluntary Disclosures Program.

This program does not apply to any tax return for which we have started a review.

Late filing penalties

The CRA will charge a late filing penalty if you do not file your T1-OVP, 2022 Individual Tax Return for RRSP, PRPP and SPP Excess Contributions return on time. The due date for filing the T1-OVP is 90 days after the end of the calendar year.

The penalty is:

• 5% of your balance owing
  plus
• 1% of your balance owing for each month that your T1-OVP return is late, to a maximum of 12 months

Your late filing penalty may be higher if CRA charged you a late filing penalty on your T1-OVP return for any of the three previous years.

Interest charges

Interest is compounded daily on:

• unpaid tax calculated on your T1-OVP, 2022 Individual Tax Return for RRSP, PRPP and SPP Excess Contributions
• unpaid late filing penalty

CRA calculates interest starting on the 91st day of the following year.

For more information on relief of late filing penalties and interest, see Information Circular IC07-1, Taxpayer Relief Provisions.

Forms and publications

• T1-OVP, 2022 Individual Tax Return for RRSP, PRPP and SPP Excess Contributions
• T1-OVP-S, 2022 Simplified Individual Tax Return for RRSP, PRPP and SPP Excess Contributions
• Information Circular IC00-1R6, Voluntary Disclosures Program
• Information Circular IC07-1, Taxpayer Relief Provisions