Your Registered Retirement Savings Plan (RRSP) deduction limit is the maximum amount of RRSP contributions you can deduct on your return to help you lower your tax payable for the year. By deducting your RRSP contributions on your return (up to your deduction limit for the year), you can bring down your income tax bracket and, therefore, pay less tax.
You can find your RRSP deduction limit for a given year:
- At the bottom of your latest notice of assessment or reassessment
- On the Canada Revenue Agency (CRA) website by logging in to My Account (if you're registered)
- By calling the RRSP Tax Information Phone Service (TIPS) hotline at 1-800-267-6999 or
- On your T1028: Your RRSP Information for 2017
Carrying forward your RRSP deduction limit
If you don't use your entire RRSP deduction limit in a given year, the unused portion is carried forward and added to your new limit for next year. Your RRSP deduction limit is calculated based on your earned income plus any unused RRSP deduction limit from prior years minus any pension adjustments.
Example: Thomas has a 2017 RRSP deduction limit of $14,000. In 2017, he contributed $6,000 to his RRSPs. The unused portion of RRSP deduction limit is $8,000 ($14,000 - $6,000). He can either contribute another $8,000 to his RRSP in 2017 or carry it forward to be added to his RRSP deduction limit for 2018.
When contributing to your RRSP, make sure you don’t contribute more than $2,000 over your deduction limit as you'll have to pay a tax of 1% per month on the excess contributions.
Example: Thomas has decided that for 2017, instead of making RRSP contributions once a year, he will set up monthly automatic withdrawals for his RRSP contributions. The amount he decides to withdraw and contribute to his RRSPs each month is $1,500. His 2017 RRSP deduction limit is $14,000. At the end of the year, Thomas realizes that he has over contributed to his RRSPs by $4,000.
RRSP contributions: $1,500 x 12=$18,000
RRSP deduction limit: $14,000
Over contribution: $18,000 - $14,000 = $4,000
The CRA allows an over contribution of $2,000 before applying any penalties. In this case, Thomas over-contributed by more than $2,000 and has to pay a tax of 1% per month on the excess amount or he can request to have it returned to him.
Where do I claim this?
Follow these steps in H&R Block’s 2017 tax software:
- On the QUICK ENTRY tab, click the QUICK SLIP icon.
- Type RRSP deduction limit for 2017 in the search field and either click the highlighted selection or press Enter to continue.
- When you arrive at the RRSP page, enter your information into the tax software.