2008 RRSP (Registered Retirement Saving Plan) Canada

RRSP Contribution Deadline for 2008 Tax Year: March 01, 2009!

How much can I contribute to my own RRSPs?

The maximum RRSP contribution limit for 2008 is $20,000. However, if you did not use all of your RRSP contribution limit for the years 1991-2007, you can carry forward the unused amount to 2008. Therefore, your RRSP contribution limit for 2008 may be more than $20,000.

The maximum RRSP contribution limit for subsequent years is as follows:

• 2007 maximum RRSP contribution limit: $19,000
• 2008 maximum RRSP contribution limit: $20,000
• 2009 maximum RRSP contribution limit: $21,000
• 2010 maximum RRSP contribution limit: $22,000

Generally, the amount you can contribute to your own RRSPs or your spouse’s RRSPs, or your common-law partner’s RRSPs for a given tax year without tax implications is determined by your RRSP deduction limit. This is often called your “contribution room”. Amounts that you contribute above this limit may be considered excess contributions. Your RRSP deduction limit is shown on the latest Notice of Assessment, Notice of Reassessment, or on a T1028, Your RRSP Information for 2008, that Canada Revenuse Agency sent you after processing your 2008 return. You can also find out about your contribution room by registering for My Account. Once you’ve registered and received your password, you can sign in and access your RRSP Deduction Limit Statement online.

Tax Penalty on Over-Contributions

You are subject to a penalty of 1% per month on the portion of your RRSP contribution that exceeds your lifetime over-contribution limit of $2,000.

How much can I deduct on my tax return?

The amount of RRSP contributions that you can deduct on your tax return for a given year is determined by your RRSP deduction limit.
Your RRSP deduction limit can be found on the RRSP Deduction Limit Statement which appears on your latest Notice of Assessment or Notice of Reassessment or on a T1028, Your RRSP Information for 2008.

On your 2008 income tax return, you can deduct contributions you made to your RRSPs between January 1, 1991, and March 1, 2008.
You can deduct these contributions if you did not deduct them for any other year and if they are not more than your RRSP deduction limit for 2008.

If you can no longer contribute to your RRSPs in 2008 because of your age (the year after you turn 69; beginning in 2008, under proposed legislation, the year after you turn 71) you can still deduct the contributions you made in a previous year, up to your RRSP deduction limit.

Please note that repayments under the Home Buyers’ Plan (HBP) or Lifelong Learning Plan (LLP) are not deductible on your return even though the RRSP issuer will give you an official receipt for the contribution. You will record your repayments on Schedule 7, which you will file with your tax return.

Please note that generally, amounts you transfer directly to your RRSP do not affect your RRSP deduction limit. However, you may need to include an amount in income and claim an offsetting deduction.

The maximum RRSP deduction limit for 2008 is $20,000. However, if you did not use all of your RRSP deduction limit for the years 1991-2007, you can carry forward the unused amount to 2008. Therefore, your RRSP deduction limit for 2008 may be more than $20,000.

The maximum RRSP deduction limit for subsequent years is as follows:

• 2007 maximum RRSP deduction limit: $19,000
• 2008 maximum RRSP deduction limit: $20,000
• 2009 maximum RRSP deduction limit: $21,000
• 2010 maximum RRSP deduction limit: $22,000

RRSP_Withdrawals

When redeeming units from an RRSP, the withdrawal will automatically be reduced by the appropriate amount of withholding tax. The table below indicates the amount of tax that will be withheld at source on RRSP withdrawals, as prescribed by Canada Revenue Agency (CRA).

RRSP Terms:

• RRSP contribution – This is the amount you pay, in cash or in kind, at the time you contribute to an RRSP.
• RRSP deduction – Refers to the amount you indicate on line 208 when you file your return.
• RRSP deduction limit – This refers to the maximum amount you can deduct from contributions you made to your RRSPs or to a spousal or common-law partner RRSP for a year. The calculation is based, in part, on your previous year earned income (excluding transfers to your RRSPs of certain types of qualifying income). Pension adjustments (PAs), past service pension adjustments (PSPAs), pension adjustment reversals (PARs), and your unused RRSP deduction room, are also used to calculate the limit.

The above information provided by Canada Revenue Agency.