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| *Ostroff, Fair and Company>>>Canada Taxes |
What is the top end of the RRSP deduction you can make each year? |
What is the top end of the RRSP deduction you can make each year? How much may you put into your RRSP? The amount you may deduct on your income tax return is indicated on the Assessment Notice which you get back from Revenue Canada after you file a tax return. When you filed your tax return for 1997, you got back an Assessment Notice for that return. On it, you will find a notice to you indicating the maximum amount you are able to deduct on your tax return for 1998. The amount is determined by the figures on your return for 1997. You may contribute more than that amount, but the limit as shown is all you may deduct. If your contributions exceed that limit by more than $2,000 you may be hit with penalties. Children under 18 may not take advantage of this overcontribution. So How does Revenue Canada calculate your limit? A detailed worksheet for calculating the amount you may deduct on your tax return is printed in the guide "RRSP and Other Registered Plans for Retirement." In summary, to determine the amount you may deduct on, say, your 1998 tax return, you need to use the numbers on your 1997 return. Add your Employment Earnings, Self-Employed earnings, Rental Income, Taxable Alimony or Maintenance Payments received, Profit Sharing Plan allocations, CPP Disability Payments, and from all these, deduct your (deductible) Alimony or Maintenance Payments Paid, Union/Professional Dues paid and Employment Expenses. Multiply the result by 18%. Take the lessor of this result or $13,500 and deduct the Pension Adjustment (if any) on your 1998 T4 slip. If you had "Unused Deduction Room" left from 1997, add this amount. The worksheet has a more detailed calculation. -Dwayne YOu should have your statement from your income tax return last year...that will tell you what your max rrsp can be. |
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