CRA reference:
https://solidtax.ca/wp-content/uploads/2022/09/t4040-21e-RRSP.pdf
How much can I deduct from my RRSP contributions?
How much you can deduct from your RRSP contributions for the year is determined by two main factors, how much income you earn and what your RRSP deduction limit is. The RRSP deduction limit is how much you can contribute into your RRSP for the year. You can deduct up to 100 per cent of the contribution to decrease your taxable income.
How do I know how much I can contribute to my RRSP?
How much you can contribute to your RRSP is determined by the deduction limit. This is calculated based on your RRSP contributions and your income in the previous tax year.
What are the tax implications to contributing to my spouse or common law partner’s RRSP?
A spousal RRSP is an RRSP account that:
- Your spouse or common-law contributed to
- Received transfers from the spouse or common-law partner’s RRIF
The spousal RRSP can only be claimed for tax deduction by the person who received the slip, also called the annuitant.
What if you cannot deduct the full amount of your RRSP contributions in the year?
If you cannot use all your RRSP contributions during the year due to your deduction limit or income, then the unused RRSP amounts can be carried over into the future indefinitely.
I have received a retirement allowance and transferred it into my RRSP, is this deductible?
If you had received a retirement allowance and you transferred into it, this is also deductible to reduce your taxable income, in addition to any other contributions you’ve made.
What are the tax implications of withdrawing from my RRSP?
If you are withdrawing from your RRSP, 100 percent of the withdrawal is considered taxable income on your income taxes based on your marginal tax rate.
What is the Home Buyer’s Plan (HBP)?
The Home Buyers’ Plan is a program that allows you to withdraw funds fromit to buy or build a qualifying home for yourself or for a related person with a disability.
How do I qualify for the HBP?
There are a few criteria that you must meet to qualify for the HBP:
- You must be considered a FIRST-TIME HOME BUYER
- You must have a written agreement to buy or build a home (for yourself or for a related person with a disability)
- You must be a resident of Canada up to the time the home is bought or built
- You must intend to occupy the home as your principal residence within one year of buying or building it.
Who is considered a first-time home buyer?
You are considered a first-time home buyer when you or your spouse/common-law partner did not OCCUPY and OWN your own home in the previous four-year period.
- Example: if you withdraw funds on March 31, 2022, the four-year period begins on January 1, 2018 and ends on February 28, 2022.
What are the limits to the HBP?
You can only withdraw up to $35,000 from it, however locked in or group RRSPs will not allow you to withdraw funds from them.
What are the tax implications of having a HBP?
First, buying your home will give you the First-time Home Buyer’s Tax Credit, meaning you can claim $5,000 of non-refundable tax credit. A non-refundable tax credit means that the credit cannot be used to increase your tax refund or to create a tax refund when you wouldn’t have already had one. This credit would generally be used to reduce amounts owing. Secondly, the repayment of your HBP is considered taxable income on top of your other income on your income taxes.
When does repayment of HBP start?
The repayment of HBP starts in the second year after the year when you first withdrew the funds from your RRSP for the HBP.
