# Notice of Assessment, unused RRSP contributions help



## barry.choi

I am currently doing my taxes and have come upon an error saying I have over contributed

My RRSP deduction limit is $3708 (from A of my 2010 notice of assessment)

I contributed a total of $3698 ($3102+$596)

Undeducted contributions (per 2010 assessment, line B) = $734


What I don't understand is the $734. I don't ever recall claiming an undeducted contribution. 

Is it this $734 that is putting me over my limit? Technically speaking couldn't I just not put down the $734 and carry it forward?

Or could I put down just $10 for undeducted credits (which would put me at my limit of $3708) and then carry over the remaining $724? 

Will they know I am carrying over $724 if I do the above? How many years forward can I carry this undeducted amount?

I looked back and this $734 started to appear as of my 2009 assessment (I suspect due to my company pension plan)

Upon further investigation it appears I am allowed an over contribution of $2000 so maybe I should just claim it and be more careful in the future.

Please advise


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## caricole

> Or could I put down just $10 for undeducted credits (which would put me at my limit of $3708) and then carry over the remaining $724?


By filing schedule 7, your undeducted contribution of 724$ will be automaticly carried forward indefinitly up and till you use it in the futur

As long as you have no undeducted contribution exeeding 2.000$, because a that point, a penalty kicks in


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## OptsyEagle

You said you contributed $3,698 in 2010 but did you deduct $3,698 in 2010? If you didn't, it would get classified as "unused".


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## OhGreatGuru

You are the victim of one of the most misleading pieces of information CRA sends out every year to taxpayers. Many people read Line A of the NOA where it says "RRSP Deduction Limit" for the coming year, and interpret it to mean RRSP Contribution Limit for the coming year. But if you have undeducted contributions showing in Line B, these have been included in calculating the amount in Line A. You need to subtract Line B from A to find out what your available contribution room is.

CRA's own web site is just as confused regarding the distinction between contribution limit and deduction limit, and the problem is reproduced in numerous articles on the web.

If memory serves me correctly, if you have undeducted contributions, it may say somewhere else in the text of the NOA what your contribution limit is. But I can't find an example that had this in order to check.

As for how this undeducted contribution came about, you would have to look back at past returns to see if you reported contributions to your pension fund or RRSP but made an error and did not deduct the full amount. 
(Or maybe CRA carried it forward for you because you did not need the full deduction to reduce your taxes to zero?)


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## barry.choi

OhGreatGuru said:


> You are the victim of one of the most misleading pieces of information CRA sends out every year to taxpayers. Many people read Line A of the NOA where it says "RRSP Deduction Limit" for the coming year, and interpret it to mean RRSP Contribution Limit for the coming year. But if you have undeducted contributions showing in Line B, these have been included in calculating the amount in Line A. You need to subtract Line B from A to find out what your available contribution room is.


Yes this seems to be the case as I thought it meant I had an additional $734 to use ON TOP of my $3708. I'm fairly positive it started with my pension.

What I'll do is not claim it this year then when I get my RRSP room for 2012 I'll do as you suggested and subtract Line B from A.

Thanks for the info.


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## barry.choi

Now that 2012 tax year is over I just wanted to follow this up just to be certain I don't go over my "limit"

So according to my CRA account I have $1246 of RRSP room for 2012. Since I still have an undeducted amount of $734 still that I did not claim the last few years does that mean I should only be contributing $512?

How do I eliminate line B from my assessment? e.g. I want to claim that amount so I have $0 in Line B/

To complicate things I actually already contributed $722 in 2012 forgetting that I need to subtract Line B so there is a difference of about $210


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## OptsyEagle

The best you can do is deduct $1246 this year. You will end up with $210 of undeducted contributions. Just make sure you subtract the $210 from the deduction limit for 2013 and contribute that exact amount and your issue will be over.

The understanding of it is the main thing, so that you don't go over the $2,000 of allowed over-contributions, and experience penalties. Having an amount in the undeducted category is fine as long as you understand what it means and make it part of your tax plan.


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## barry.choi

OptsyEagle said:


> The best you can do is deduct $1246 this year. You will end up with $210 of undeducted contributions. Just make sure you subtract the $210 from the deduction limit for 2013 and contribute that exact amount and your issue will be over.
> 
> The understanding of it is the main thing, so that you don't go over the $2,000 of allowed over-contributions, and experience penalties. Having an amount in the undeducted category is fine as long as you understand what it means and make it part of your tax plan.


I understand the amount, I guess the question is how do I eliminate the Line B?

From what I recall when I file my taxes there is a section about line B undeducted RRSP. So In theory I should be putting say $722 (off new contributions) + $512 (from line B), Total = $1246?

Then I carry over $210 of Line B for the next year?

What's odd though is I thought I had already done the math properly when I got my letter of assessment last year and noticed the Line B for the first time but now I have an extra $210 that I didn't factor.

Could have been a mistake on my end or I suppose it's possible the number on the CRA site right now is not correct.

Of course I could look at my old tax return to figure it out but don't feel like digging around right now.


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## OptsyEagle

Well, I think you have figured out how it works and that is the main thing.

Keep in mind, that because I almost always jump the gun and start contributing to my RRSP, for the current taxation year, in January, I almost always have some amounts of undeducted contributions, in Line B on my NOA. 

The receipts for the contributions I make in January and February come to me right away, since my broker doesn't know when I intend to deduct them. I simply declare them on my schedule 7 and deduct them next year. That's my strategy and I have no problem with it. I find it nice that CRA keeps track of them for me in this way, even though I doubt would have forgotten about them anyways.

So I wouldn't get too pre-occupied with having a balance in that line B area.


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## barry.choi

OptsyEagle said:


> Well, I think you have figured out how it works and that is the main thing.
> 
> Keep in mind, that because I almost always jump the gun and start contributing to my RRSP, for the current taxation year, in January, I almost always have some amounts of undeducted contributions, in Line B on my NOA.
> 
> The receipts for the contributions I make in January and February come to me right away, since my broker doesn't know when I intend to deduct them. I simply declare them on my schedule 7 and deduct them next year. That's my strategy and I have no problem with it. I find it nice that CRA keeps track of them for me in this way, even though I doubt would have forgotten about them anyways.
> 
> So I wouldn't get too pre-occupied with having a balance in that line B area.


True I'm probably over thinking this. I just like having everything nice and even. For me personally I have a pension and I try to keep my RRSP maxed out so when I have the undeducted amount "psychologically" I feel like I'm not saving to the best I can.

Of course this is a good problem. I should probably just divert my attention to my TFSA and not worry as much about the minimal amount that's been undeducted


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## Eclectic12

barry.choi said:


> I understand the amount, I guess the question is how do I eliminate the Line B?...


On schedule 7, Part A "Contributions", line 1 - enter the latest NOA line B item (i.e. the unclaimed RRSP contribution).

This will identify it as an unclaimed (or in CRA's terminology, "unused") RRSP contibution from previous years that will not require a receipt.

*Edit:* Part A, lines 2 and 3 will list the RRSP contributions made from the previous March 1st to the current March 1st.

Part A line 5 will add them up to a total amount. This should be less than or equal to the previous NOA deduction limit (i.e. Part A).


Then on Part C, line 10 - enter the current year RRSP contributions plus the NOA line B number (i.e. Part C, line 9). 

This identifies that you want to claim both the contributions made and the previously unclaimed contributions.


Compare Part C, line 9 and 12 (these are likely the same) and enter the lower of the two in line 13. The number from line 13 is entered on the T1 form, line 208 as the RRSP contributions being claimed.

Here's a link to the PDF copy of schedule 7.
http://www.cra-arc.gc.ca/E/pbg/tf/5000-s7/5000-s7-12e.pdf


Cheers


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## none

OhGreatGuru said:


> You are the victim of one of the most misleading pieces of information CRA sends out every year to taxpayers. Many people read Line A of the NOA where it says "RRSP Deduction Limit" for the coming year, and interpret it to mean RRSP Contribution Limit for the coming year. But if you have undeducted contributions showing in Line B, these have been included in calculating the amount in Line A. You need to subtract Line B from A to find out what your available contribution room is.
> 
> CRA's own web site is just as confused regarding the distinction between contribution limit and deduction limit, and the problem is reproduced in numerous articles on the web.
> 
> If memory serves me correctly, if you have undeducted contributions, it may say somewhere else in the text of the NOA what your contribution limit is. But I can't find an example that had this in order to check.
> 
> As for how this undeducted contribution came about, you would have to look back at past returns to see if you reported contributions to your pension fund or RRSP but made an error and did not deduct the full amount.
> (Or maybe CRA carried it forward for you because you did not need the full deduction to reduce your taxes to zero?)


Whew! Thanks for pointing that out! I almost dropped a bunch of cash into my RRSP without realizing that I had no room left. THANK YOU!


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## snowbird

OhGreatGuru said:


> You are the victim of one of the most misleading pieces of information CRA sends out every year to taxpayers. Many people read Line A of the NOA where it says "RRSP Deduction Limit" for the coming year, and interpret it to mean RRSP Contribution Limit for the coming year. But if you have undeducted contributions showing in Line B, these have been included in calculating the amount in Line A. You need to subtract Line B from A to find out what your available contribution room is.
> 
> CRA's own web site is just as confused regarding the distinction between contribution limit and deduction limit, and the problem is reproduced in numerous articles on the web.
> 
> If memory serves me correctly, if you have undeducted contributions, it may say somewhere else in the text of the NOA what your contribution limit is. But I can't find an example that had this in order to check.
> 
> As for how this undeducted contribution came about, you would have to look back at past returns to see if you reported contributions to your pension fund or RRSP but made an error and did not deduct the full amount.
> (Or maybe CRA carried it forward for you because you did not need the full deduction to reduce your taxes to zero?)


Geez, if i'm reading this correctly then i'm afraid i've made a huge mistake and i'm now thoroughly confused. 
My 2011 NOA stated - Your 2012 RRSP deduction limit is $19,633 and Unused RRSP contributions available to deduct for 2012 $4,689.00; so i added both numbers and i may now have put in excess cash in my RRSP account totaling about $6K. 

Should i have deducted the $4,689 from $19,633 instead? How much can i actually claim on the Tax form and what happens to the excess? Is this where a penalty kicks in or can i withdraw the excess and JUST apologize to CRA


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## Charlie

You had $19,633 room with $4,689 already there. So you had $14,944 left over room for your 2012 contribution. Any amount more than $16,944 contributed before December 2012 will be subject to a penalty of 1% per month. They let you over contribute by $2K.

You'll claim $19,633 on your 2012 taxes. Your 2013 room kicked in Jan 1, so as long as it's greater than the 'excess' there's no need to take it out. It carries forward to 2013.

CRA will accept your apology as long as it's accompanied by the penalty form (T1-OVP) and a cheque .


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## OptsyEagle

Charlie said:


> CRA will accept your apology as long as it's accompanied by the penalty form (T1-OVP) and a cheque .


Bless their hearts. Nice to see that they are not completely cold hearted. lol.


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## snowbird

Charlie said:


> You had $19,633 room with $4,689 already there. So you had $14,944 left over room for your 2012 contribution. Any amount more than $16,944 contributed before December 2012 will be subject to a penalty of 1% per month. They let you over contribute by $2K.
> 
> You'll claim $19,633 on your 2012 taxes. Your 2013 room kicked in Jan 1, so as long as it's greater than the 'excess' there's no need to take it out. It carries forward to 2013.
> 
> CRA will accept your apology as long as it's accompanied by the penalty form (T1-OVP) and a cheque .


Thanks so much Charlie, this clears things up for me a great deal. Well, since the deed is done, do i need to wait for the CRA for a notice of penalty before sending in that form? When does the monthly penalty kick in - is it from the month of deposit to date? I plan on giving them a call tomorrow to plead my case though...


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