How contributions affect your RRSP deduction limit (2024)

What is your RRSP deduction limit

Your registered retirement savings plan (RRSP) deduction limit, is the maximum amount you can deduct from contributions made to your RRSPs, PRPP, SPP and to your spouse’s or common-law partner’s RRSP or SPP for a year.

Note

Certain types of qualifying income transferred to your RRSPs are excluded from the calculation of your RRSP deduction limit.

How is your RRSP deduction limit determined

The Canada Revenue Agency generally calculates your RRSP deduction limit as follows:

your unused RRSP deduction room at the end of the preceding year

Plus

The lesser of the two following items:
- 18% of your earned income in the previous year
- the annual RRSP limit (for 2023, the annual limit is $30,780)
That exceeds one of the following items:
- your pension adjustment (PA)
- your prescribed amount for connected persons

Plus

your pension adjustment reversal (PAR)

Minus

your net past service pension adjustment (PSPA)

If you want to calculate your RRSP deduction limit yourself, see chart 3 of Guide T4040, RRSPs and Other Registered Plans for Retirement.

Who can contribute to an RRSP, PRPP, or SPP

Generally, you can contribute to your RRSP, PRPP, or SPP:

until December31st of the year you turn 71years of age
when you have an available RRSP deduction limit

You can contribute to your spouse’s or common-law partner’s RRSP or SPP until December31st of the year that they turn 71years of age.

What is the deadline to contribute to an RRSP, PRPP, or SPP for the purpose of claiming a deduction on your 2023 return

Contributions made to yourRRSP, PRPP or SPP or your spouse's RRSP or SPPfromMarch 2,2023 to February 29,2024 qualify.

What if you contribute more than your RRSP deduction limit

Generally, you have to pay a tax of 1 percent per month on your contributions that exceed your RRSP deduction limit by more than$2,000.

For more information, go to Excess Contributions

What RRSP, PRPP, or SPP contributions can you deduct on your income tax and benefit return

You can claim a deduction for:

contributions you made to your RRSP, PRPP or SPP
contributions you made to your spouse’s or common-law partner’s RRSP or SPP
your unused RRSP, PRPP or SPP contributions from a previous year

You cannot claim a deduction for:

amounts you pay for administration services for an RRSP
brokerage fees charged to buy and sell within a trusteed RRSP
the interest you paid on money you borrowed to contribute to an RRSP, PRPP, or SPP
any capital losses within your RRSP
employer contributions to your PRPP

What is not considered an RRSP, PRPP, or SPP contribution

The following are not considered to be an RRSP, PRPP, or SPP contribution for the purpose of claiming a deduction on your tax return. Find out the special rules that apply if you:

transfer amounts to your RRSP, PRPP, and SPP
repay funds that you withdrew under the Home Buyers’ Plan
repay funds that you withdrew under the Lifelong Learning Plan

Amounts you transfer directly to your RRSP, PRPP, and SPP do not affect your RRSP deduction limit. However, you may need to include an amount in income and claim an offsetting deduction. See transferring certain types of payments for information about the special rules that apply.

Can contributions be made to a deceased individual’s RRSP, PRPP, or SPP

No one can contribute to a deceased individual’s RRSP, PRPP or SPP after the date of death.

But, the deceased individual’s legal representative can make contributions to the surviving spouse’s or common-law partner’s RRSP and SPP. The contribution must be made within the year of death or during the first 60 days after the end of that year.

Contributions made to a spouse’s or common-law partner’s RRSP or SPP can be claimed on the deceased individual’s tax return, up to that individual’s RRSP deduction limit, for the year of death.

Forms and publications

Guide T4040, RRSPs and Other Registered Plans for Retirement

Page details

Date modified:: 2024-01-12

How contributions affect your RRSP deduction limit (2024)

FAQs

What happens if you contribute more than your RRSP deduction limit? ›

What if you contribute more than your RRSP deduction limit. Generally, you have to pay a tax of 1 percent per month on your contributions that exceed your RRSP deduction limit by more than $2,000.

Read On ›

What is the difference between RRSP contribution limit and deduction limit? ›

An RRSP contribution limit sets a cap on the amount of money you can contribute to your RRSP in a given year. Your RRSP deduction limit determines the maximum amount of money you're allowed to claim as a tax deduction on your income tax return for contributions made to your RRSP.

Discover More Details ›

Are contributions to RRSP tax deductible? ›

Any money you contribute to an RRSP will be tax-exempt in the year you make the contribution. That means if you used after-tax dollars to make your RRSP contribution, the government will deduct the taxes you paid from your tax bill.

Should you max out RRSP contributions? ›

However, unless you maximize your RRSP contributions every year, you will likely cheat yourself out of significant benefits at retirement. To take advantage of tax-free compounding over time, it is vital to contribute as much money every year you can and as early as possible.

See Details ›

How do I fix over contributions to my RRSP? ›

You should withdraw the excess contribution. If you ask your financial institution for an RRSP withdrawal, they will withhold income tax based on the size of the withdrawal. In the case of a withdrawal of less than $5,000, there is 10% withholding tax (5% in Quebec, where 14% provincial tax is also applied).

Find Out More ›

What if my RRSP contribution is greater than my income? ›

Penalty for over-contributing to an RRSP

If you end up with an RRSP over-contribution in excess of the $2,000 buffer, you may owe taxes. The CRA will charge you a 1% penalty, assessed monthly, for each month you're over the limit. There are ways to minimise your penalty and avoid paying taxes on the extra amount.

Tell Me More ›

Why is my RRSP deduction limit $0? ›

Your RRSP deduction limit for 2023 is based on your earned income for 2022 (and on earned income from previous years, if you had any). Since you have not filed a return yet, we have no record of your earned income from 2022 or 2023, so your RRSP deduction limit for 2023 shows as zero.

Show Me More ›

Can I withdraw my RRSP deduction limit? ›

The withdrawal is not taxable as long as the funds are paid back to your RRSP over a 10-year period, typically starting five years after your first withdrawal. Up to $10,000 can be withdrawn annually with a maximum lifetime withdrawal of up to $20,000 if you meet the criteria.

Explore More ›

Does the RRSP deduction limit carry forward? ›

If you don't make the maximum allowable RRSP contribution in any given year, Canada Revenue Agency (CRA) lets you carry forward the unused contribution room indefinitely and add this to the amount you can contribute for future years.

How much do RRSP contributions reduce taxable income? ›

Contributions can be deducted from taxable income when filing your tax return, meaning you can end up paying less taxes and saving more money. You may get anywhere from 20 per cent to 50 per cent of your RRSP contributions back as an income tax refund based on your marginal tax rate.

Show Me More ›

How to calculate your RRSP deduction limit? ›

How do I calculate the RRSP contribution room?

Multiply the amount of your annual earned income by 0.18. ...
If you have a workplace pension, subtract your annual pension adjustment (you can find this information in Box 52 on the T4 slip from your employer).

More items...

Dec 12, 2023

Read The Full Story ›

How to read RRSP deduction limit statement? ›

Understanding the RRSP Deduction Limit Statement

Line 1: RRSP deduction limit for 2022 — reflects RRSP carry forward room available from the prior year of $100,649. ...
Line 4: Additional RRSP room generated of $12,484 given their 2022 earned income times 18%, up to the annual limit. ...
The next two lines can be problematic.

Jan 25, 2024

See Details ›

Is the RRSP deduction limit the same as the contribution limit? ›

What is an RRSP Deduction Limit? Your RRSP deduction limit, also known as your "RRSP contribution limit" is the maximum amount you can contribute to your personal or a spousal RRSP in a given year.

Get More Info Here ›

What if my RRSP contribution exceeds my deduction limit by more than $2000? ›

Generally, you have to pay a tax of 1% per month on your unused contributions that exceed your RRSP deduction limit by more than $2,000.

At what point should I stop contributing to RRSP? ›

December 31 of the year you turn 71 years old is the last day that you can contribute to your RRSPs.

What happens if I exceed my TFSA contribution limit? ›

At any time in the year, if you contribute more than your available TFSA contribution room you will have to pay a tax equal to 1% of the highest excess TFSA amount in the month, for each month that the excess amount stays in your account. For more information, see Tax payable on excess TFSA amount.

View Details ›

Can I contribute to RRSP but not claim deduction? ›

If you did not deduct all of the contributions you made to your RRSP, PRPP, or SPP or your spouse's or common-law partner's RRSP, or SPP, you have two options: you can leave the unused contributions in the plan. you can withdraw the unused contributions.

How contributions affect your RRSP deduction limit (2024)

On this page

What is your RRSP deduction limit

Note

How is your RRSP deduction limit determined

Who can contribute to an RRSP, PRPP, or SPP

What is the deadline to contribute to an RRSP, PRPP, or SPP for the purpose of claiming a deduction on your 2023 return

What if you contribute more than your RRSP deduction limit

What RRSP, PRPP, or SPP contributions can you deduct on your income tax and benefit return

What is not considered an RRSP, PRPP, or SPP contribution

Can contributions be made to a deceased individual’s RRSP, PRPP, or SPP

Forms and publications

Related links

Page details

FAQs

What happens if you contribute more than your RRSP deduction limit? ›

How to calculate your RRSP deduction limit? ›