Tax Tips - Personal Tax Returns: RRSP  Tips

The RRSP over contribution limit is $2,000. A penalty tax will apply is an amount in excess of $2,000.00 is contributed to your RRSP which can not be deducted in the year.

Spousal RRSP's allow an individual to shift future RRSP income from the higher earning spouse to the lower earning spouse when making your contribution. This can result in significant tax savings when the spouses cash in their RRSP's, and may reduce some of the clawback of the Old Age Security Amounts. Provided your RRSP contribution remains in your spousal RRSP for at least three years after the contribution, the amount you contribute becomes the income of the non-contributing spouse.

For 2014, the maximum deduction allowed for an RRSP will be the lesser of $24,270 or 18% of your prior year earned income plus any RRSP contribution carry forward from previous years less your pension adjustment, which appears in box 62 of your T4 or T4A slip, if you are employed and covered by a company pension plan. Your prior year assessment notice from Revenue Canada outlines the amount of allowable RRSP contributions you can make in up to 60 days after the end of the next year to deduct on your current year income tax return. You may make your RRSP contributions at any time during the year. You increase your lifetime return if you make contributions early in the year.

RRSP's may still be purchased for individuals who have retired from a full time job and have received a retiring allowance at termination of employment. The retiring allowance is only available for service rendered by employees in 1995 and prior years. The retiring allowance must be paid by the employer and should be transferred directly to your RRSP by the employer to avoid having EI, CPP, and income tax deducted. Long time employees of companies are advised to see a tax specialist at Storoszko & Associates, to find out more about the benefits of retiring allowances.