HOW TO MAKE AN RRSP CONTRIBUTION

• If you have earned income and file an income tax return in Canada, you can contribute to an RRSP until December 31 of the year you turn 71. 

• You must also have contribution room available, which is identified on your annual Notice of Assessment sent by the Canada Revenue Agency (CRA).

• Your Notice of Assessment will also indicate the amount you can contribute for the current year. 

• As a guideline, your allowable RRSP contribution for the current year is the lower of:

• 18% of your earned income from the previous year
• The maximum annual contribution limit for the current tax year.
• The remaining limit after any company sponsored pension plan contributions

• You can contribute to an RRSP at any time. 

• To be eligible for an RRSP deduction in a specific tax year, you must make contributions during that calendar year, or up to 60 days into the following year.

• If you make an RRSP contribution beyond your maximum allowable amount for a year, it is considered an over-contribution. 

• There is an allowance of $2,000 for over-contributions. 

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

• You can also borrow funds to make a contribution.

• Be sure you can afford to make the loan payments and plan to pay it back right away.

• You can use your tax refund to help pay down the loan.

• Keep in mind that interest charges are not tax deductible.