Southcote

Has anyone come across a problem with their RRSP deduction on their tax return ? I've been working on mine, and one part of the form states that you have to put down the "lesser amount on line 9 (RRSP contributions available to deduct) and your RRSP deduction limit for 2009", which should have been on your 2008 notice of assessment. There was nothing on my 2008 NOA, so I rang the T.I.P.S, recorded helpline, which basically said I have no RRSP deduction limit for 2009, as I wasn't earning in Canada in 2008.

When you follow this through on the tax return, this seems to indicate that I am not allowed to make an RRSP contribution in 2009, as I had no declared income in 2008. This doesn't sound right - have I read this wrong ?

Aviator

Sounds right. Your 2009 RRSP contribution is set by your income in the preceding year. If you earned in 2009, your RRSP contribution will be made in the 2010 tax year.

JonboyE

Is the amount you contributed in 2009 and January/February 2010 more than $2,000?

Is it more than your 2010 deduction limit?

Southcote

Yes, I have contributed more that $2000 in '09 & '10

I don't have a deduction limit. 2008 earnings we limited to interest earnings, as I wasn't working for a while whenI first got to Canada.

JonboyE

Your 2010 limit: this is 18% of your 2009 earnings or $22,000 whichever is less.

I understand that your 2009 limit is zero. You are allowed to go over your 2009 limit by $2,000. You are not penalized if you go over your limit as a result of an employment contract (e.g. an employer sponsored scheme that you are required to participate in) and the CRA generally do not enforce these rules if your 2009 overpayment is less than your 2010 room. You should complete schedule 11 and carry the contributions to 2010.

If none of these apply you have to self-assess the penalty on a T1-OVP 2009.

Southcote

Thats interesting. I've been on the phone to the CRA today, and whilst they did mention the $2000 limit, they didn't meantion that you are allowed to exceed it if it is an employer sponsored scheme (which mine is, my employer pays into it)

Schedule 11 - thats the Educational allowances form - do you mean Schedule 7 ?

Appreciate your help, that may just have saved me a few dollars

JonboyE

Yes, Schedule 7. Brain gone.

See http://www.cra-arc.gc.ca/tx/ndvdls/t.../t1vp-eng.html Step 6. Make sure the employer scheme meets the following:

Qualifying group RRSP contributions
These are often referred to as “mandatory group RRSP contributions”. They are required contributions which you make to a “qualifying arrangement”. An arrangement is a qualifying arrangement if:

* it is for two or more individuals;
* the contributions are amounts to which you are entitled for services that you rendered; and
* the contributions are remitted to the RRSP by the person or body that is required to pay you for the services, or by an agent for that person or body.

Qualifying group RRSP contributions do not include amounts which you could have prevented from being paid after beginning to participate in the arrangement and
within the 12 months before the contribution was paid.

Southcote

I think that covers it. It is a company scheme administered by Standard Life. The contributions are part of my package and are made by the company direct to Standard Life. Does it make any difference if part of the payment is deducted from my salary as well ?

Ikatita

I'm just off the phone with the CRA, and what they said is: $2000 above the $0 limit is ok.

They didn't mention "not enforcing" (they'd be dumb if they would).

What she did say is: explain to your employer, ask them to stop contributing, and withdraw any amount above the $2000 tolerance limit.

So, I guess I'm going to go the safe route and comply (i.e. withdraw), rather than count on the CRA "not enforcing" their rules.

The agent mentioned a form T746 to be included in my tax return, if I was above $2000 contribution limit, and needed to withdraw money.

Hope this helps somebody else -- why didn't I consult the BE forum before signing up via my employer?

Southcote

From what I understand if it's a plan administered by your employer (or by a 3rd party on behalf of them) and you don't get to 'touch' the money, it's allowed. There is reference to this on the CRA website (I think one of the other posts gives the link).

I certainly made this point to the CRA and copied the relevant page from their websire, and they seem to have accepted this