brummi

Hi folks. I transferred my UK pension into a QROP RRSP last year. I have been in Canada for 4 years (a permanent resident for 2 years). I have never paid into an RRSP before this transfer. I am now declaring this on my 2011 tax return and the amount transferred exceeds my contribution eligibility for last year. Will i owe money to CRA?

el_richo

Don't you pay a penalty? Or is that just TFSA overpayments?

brummi

Well i don't know. I thought with doing the QROPS thing i was safe. H&R block haven't been helpful so far.

el_richo

That's your problem right there

el_richo

A quick google suggests you have a $2000 buffer for overpayment? Above that you pay penalties.

I'm happy to be corrected

JonboyE

Generally a pension transfer from the UK is included in taxable income under section 56 but is also deductible under section 60(j) of the Income Tax Act. As long as it is done properly it is outside, and does not affect, your RRSP contribution room.

el_richo

Thanks for correcting me. I'm looking to do mine soon too so good to know

JorgeAragon

That is correct... essentially what happens is you have to declare the income, but you do get an offsetting deduction for the contribution offsetting the added income. I have clients for whom we have helped transfer their pensions over and they did their taxes at H&R against my advice and they went through similar issues. Now they use an accountant to do their taxes, but had their transfer tax issues corrected.

Let me know if i can help with anything else...

Cheers,

jorge

brummi

Thanks for the info guys. I just went back to H&R Block and they have got it right this time. I dont owe anything. Unfortunately i dont get a return on it either, that would have been soooo nice

mjwalker007

Unfortunately the CRA wont give us our cake and eat it...........as you benefit from this transfer falling outside of your RRSP limit,you are unable to claim a tax refund on the amount.