Paying into RRSP in first year?
 

Now I'm working the company has an RRSP plan I can put money into, but reading the contribution limits on the web it appears that I can only pay in 18% of what I earnt last year.. which is $0 in Canada. So do I have to wait until 2009 before I can pay any money in?

Re: Paying into RRSP in first year?
 

That has been my understanding, but I'm sure someone will be along with clarification.

If not you can still put the money aside in a savings account, and transfer the money into your RRSP in following years up to your 18% limit if you aren't going to save near that limit in each year. Yes you'll pay tax on the interest, so not as good as getting it in now, but better than nothing.

Re: Paying into RRSP in first year?
 

RRSP contributions are based on the previous years tax return, so contributions made before end of February 2008 are based on 2006 income (tax return filed in 2007). Contributions during 2008 to February 2009 are based on 2007 (tax return filed in 2008) income.

A financial adviser should be able to help you.

Re: Paying into RRSP in first year?
 

I don't believe there is anything stopping you from contributing to an RRSP just in the first year you most likely won't be able to claim anything as a tax deduction.

But the amount should carry forward I would think and if you don't contribute to the maximum allowed in later years you can claim some or all of this years contribution.

I hope that makes sense and perhaps someone can come along and clarify this.

Cheers
Steve

Re: Paying into RRSP in first year?
 

I believe you can also pay into a Spouse's RRSP I am not sure if that stays within the 18% limit. So you could spread you payments into two RRSP accounts. Your spouse cannot draw on it for 3 years I believe.

For some information I have a link to my RRSP provider information page (I am not selling anything or recommending my provider).

Re: Paying into RRSP in first year?
 

Yeah, I was wondering that but it's not at all clear whether that's the case.

Re: Paying into RRSP in first year?
 

You can only contribute if you have room in your RRSP, based on previous earnings in the relevant tax year. If you have not earned then the investment is not RRSP eligible.

RRSP investments can only be made through a registered agent, talk to one of them, they will confirm what you can and cannot do.

http://www.cra-arc.gc.ca/tax/individ.../limits-e.html

Re: Paying into RRSP in first year?
 

As others have said, the basic rule is that you can contribute, and deduct for tax purposes, the amount shown on your tax assessment for the previous year. I.e up to February 28th, 2008 the amount shown on your 2006 assessment. If you did not work in Canada in 2006 this will be nil.

However, you are allowed to contribute up to $2,000 in excess of your limits without a penalty. You cannot deduct these contributions for tax purposes until you have a limit (so you should be able to get your refund when you file your 2008 return) but the contributions will grow tax free within the RRSP. You don't want to contribute more than $2,000 otherwise some nasty tax penalties apply, but at least this may allow you to participate in your company's scheme in 2007.

See here: http://www.cra-arc.gc.ca/tax/individ.../excess-e.html