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Couple of Canada tax questions

Couple of Canada tax questions

Old Mar 4th 2013, 12:27 am
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Default Couple of Canada tax questions

Hi I've had a look though the already posted tax questions and can't see anything!!

I'm filling in my 1st Canadian tax form, I started work at the end of July and the online tax sites are using my employment income from last year and basing it on the whole 12 months, and because of this it says I've overpaid CPP. Im not sure if I should use those values or I've found a form T2204 E and that shows a table of applicable number of months, reckon I should use those values to calculate the maximum CPP contribution for 5 months of work?

Secondly, I opened a RRSP this year and put $500 in it, when I entered it on the online forms it keeps telling me I've over contributed to my RRSP because I have no value for 2011 deduction limit and not sure what to put into the 2012 portions of contributions to use?

Anyone any ideas on either issue??

thanks
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Old Mar 4th 2013, 1:30 am
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Default Re: Couple of Canada tax questions

Maybe get it done by a tax expert for the 1st time then if it ever gets looked into there will sort all that out

Originally Posted by julescg View Post
Hi I've had a look though the already posted tax questions and can't see anything!!

I'm filling in my 1st Canadian tax form, I started work at the end of July and the online tax sites are using my employment income from last year and basing it on the whole 12 months, and because of this it says I've overpaid CPP. Im not sure if I should use those values or I've found a form T2204 E and that shows a table of applicable number of months, reckon I should use those values to calculate the maximum CPP contribution for 5 months of work?

Secondly, I opened a RRSP this year and put $500 in it, when I entered it on the online forms it keeps telling me I've over contributed to my RRSP because I have no value for 2011 deduction limit and not sure what to put into the 2012 portions of contributions to use?

Anyone any ideas on either issue??

thanks
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Old Mar 4th 2013, 1:43 am
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Default Re: Couple of Canada tax questions

The amount you can pay into an rrsp is based on your allowances from the previous tax year
You cant pay into one in your first year
Whoever allowed you / advised you to do this was very wrong
We ran into the same situation , got bad advice from rbc

You need to pull the money out of it before you get hit for penalties
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Old Mar 4th 2013, 9:09 am
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Default Re: Couple of Canada tax questions

Thanks Zoe Bell, I'll give the bank a ring later!
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Old Mar 4th 2013, 10:52 am
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Default Re: Couple of Canada tax questions

If the bank told you to open an rrsp knowing you were a new immigrant make damn sure that you
A) TELL them that THEY are responsible for any fines etc
B) complain to their manager that they are giving out VERY bad advice

RBC told us to open an rrsp within a few months of arriving, it wasn't until Ben tried to contribute to his works pension plan that his HR dept told him that he couldn't put the money in an rrsp
We were not happy at the bank to say the least
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Old Mar 4th 2013, 1:10 pm
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Default Re: Couple of Canada tax questions

Originally Posted by Zoe Bell View Post
The amount you can pay into an rrsp is based on your allowances from the previous tax year
You cant pay into one in your first year
Whoever allowed you / advised you to do this was very wrong
We ran into the same situation , got bad advice from rbc

You need to pull the money out of it before you get hit for penalties
This is wrong. It is permissable to contribute up to $2,000 over your RRSP limit in a single year. Therefore, if the OP has only contributed $500, s/he is OK.
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Old Mar 4th 2013, 1:17 pm
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Default Re: Couple of Canada tax questions

What you've said there sound familiar now that I think about it , but I know that we had issues with RBC and setting up an RRSP

I wonder what it was....

...apologies if i've confused the issue.
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Old Mar 4th 2013, 1:18 pm
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Default Re: Couple of Canada tax questions

Originally Posted by Zoe Bell View Post
What you've said there sound familiar now that I think about it , but I know that we had issues with RBC and setting up an RRSP

I wonder what it was....

...apologies if i've confused the issue.
I suspect your contributions exceeded the $2,000 maximum
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Old Mar 4th 2013, 1:39 pm
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Default Re: Couple of Canada tax questions

I think the muppet tried to tell us to wait until we got Ben's T$ then he could work out how much we would be able to pay into our RRSP before the deadline.
as you've pointed out , no matter what , we'd only have been able to pay the $2000 in no matter what

I was also pretty upset because he put $100 of ours in a GIC as security for a credit card for me (wasn't working at the time) and then never bothered to apply for the credit card, despite telling me that it would "be ready for me to pick up soon"

I accused the bank of stealing my money. That got the situation remedied pretty sharpish
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Old Mar 4th 2013, 3:39 pm
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Default Re: Couple of Canada tax questions

There are some circumstances where you can contribute to a RRSP in the first year.

As AC has already said, you can be up to $2,000 over-contributed at any time without penalty.

Also, if your employment contract requires you to contibute to an RRSP you will not be penalized.

Lastly, if you contribute in the first year you obviously cannot deduct the contributions as you have no room. Current CRA practice is that if your undeducted contribitions at the end of one year are less than your contribution room for the following year they will not assess a penalty.
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Old Mar 5th 2013, 2:34 am
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Default Re: Couple of Canada tax questions

Originally Posted by JonboyE View Post
Current CRA practice is that if your undeducted contribitions at the end of one year are less than your contribution room for the following year they will not assess a penalty.
... and as each year goes by I'm gradually getting more and more space in between the two numbers... Eventually maybe I'll actually be able to claim a years contributions in the same year I made them!

But just to back up JonboyE, I've been paying into my RRSP since I arrived, and claiming it on the following years tax return - just make sure (or hope) that your contributions in a given year are smaller than your contribution room will be for the following year. I think as long as you put less than around 15% of your income in, you should be fine.
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